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No fresh loans to SpiceJet, says State Bank of India

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State Bank of India is not looking at extending any loan to the cash-strapped airline SpiceJet, Chairperson Arundhati Bhattacharya said today.Stating that the bank does not have any exposure to the airline, she said: “We just have two current accounts with the airline and the bank is not looking at giving any fresh loan to the carrier.”Earlier this week, the Civil Aviation Ministry had said it may request Indian banks/financial institutions to extend loans of up to Rs 600 crore to the airline.A Ministry release had also that it would request the Finance Ministry to permit external commercial borrowing (ECB) for working capital as special dispensation.On rupee volatility, she said it came only a few days ago and she needs to watch out how long it lasts.On whether the bank is worried over unhedged corporate loan exposure due to the ongoing rupee volatility, she said “at this time no need to press the panic button.” “We always ask our clients to hedge but no one hedges completely. Hopefully all our clients have sensibly hedged what are the immediate requirements,” she told reporters on the sidelines of launching tech-learning centres for customers.She said the move is aimed at empowering the customers through technology and awareness of its tech channels amongst customers. The bank will be launching 385 such centres across the country, she added.The first centre was launched by Reserve Bank Deputy Governor H R Khan here this evening.She said by March 2015, there is a plan to install 4,000 additional cash-recyclers which serve the twin purpose of cash deposit and withdrawal. With these installations, the State Bank Group will have a network of 52,791 ATMs, CDMs, cash recyclers.She said that around Rs 44 crore worth of transactions happen at RBI every month out of which Rs 37 crore are generated manually.
“Out of the Rs 37 crore transactions, 65 per cent take place on alternative channels like ATMs, mobile banking and the Internet. We aim to increase it to 85 per cent in the next one year,” Bhattacharya said.
[…]

Starting a payday loan business – Business – Jamaica Gleaner …

Personal Financial Advisor, OranHall

I am about to open a payday loan business and I am asking for your advice and suggestions. I would be very happy to hear from you.

– Desrene

FINANCIAL ADVISER: There is no full-fledged regulation of the payday loan business. Commercial banks and credit unions which grant such loans are regulated by the Bank of Jamaica, but there are many other players in the payday loan business and they are not regulated.

You seem to be interested in setting up an informal payday loan business, but you should note that such businesses will soon be regulated.

My first suggestion is that you register your business at the Companies Office of Jamaica and treat it as a serious enterprise. Select a reliable and reputable group of persons to serve as its board of directors. If you can find persons with expertise in the credit business and with the ability to give time and add value to your business, invite them to serve as directors.

Ensure that your business is adequately capitalised. You will need financial resources to meet the daily expenses of running your business and, importantly, to lend to your customers so that the business can make money.

Businesses take time to make money and it is easier to make them strong if profits are reinvested. Pay yourself a salary rather than withdraw money to meet your expenses. Remember that you are running a business.

The Money Lending Act requires that businesses such as the kind you want to set up lend at a maximum rate of 40 per cent per annum, but many informal operators pay no attention to this requirement sometimes charging way above that rate. Where the rate is to be exceeded, it is required by law that an application be made to the Ministry of Finance for an exemption.

market-driven rates

You will find, though, that rates are market-driven, so you must be aware of the rates charged by your competitors – and there are many. You may use the add-on or reducing balance method to determine how interest is determined. In fairness to the borrower, it makes sense to also state the annual percentage rate.

This will help the consumer to better understand the real cost of the loan and to be in a better position to compare rates.

Make sure that you use a contract that spells out very clearly the terms and conditions of each transaction. Once signed, the contract binds both parties. Seek legal assistance to draft the contract if necessary.

Be fair to the consumer. Avoid loosely adding processing fees and other charges which increase the cost to the unsuspecting borrower. Bear in mind that lending rates are as high as they are due to the risk to which the lender is exposed.

But you must protect your own interest. Some lenders give unsecured loans; others do not. A good, tight contract is one way to protect yourself and your business.

Additionally, limit your business to employees of reputable organisations and to individuals who have worked with their current employer for a minimum period of six months, for example. Set upper and lower loan limits. Pay attention to the quality of the guarantor and the collateral.

Pay attention to the quality of your customer. Some lenders do this by requiring that prospective customers provide the following: a valid government-issued identification, proof of address, their TRN, three recent pay slips, a job letter, a statement of account from the bank and personal references. It is up to you to decide how far you will go in confirming who your client is.

It is one thing to get customers. It is quite another to keep them and to get referrals from them to grow your business. Keep your part of the contract and give service above the customer’s expectations.

Charge reasonable rates and focus on the long-term viability of your business. If you get things right now, it will be much easier for you when the business is regulated.

Oran A. Hall, principal author of ‘The Handbook of Personal Financial Planning’, offers free personal financial planning advice and counsel.finviser.jm@gmail.com

[…]

Cash Store Financial says Ontario will not issue license to subsidiaries

The Cash Store Financial Services announced that the Registrar of the Ministry of Consumer Services in Ontario has issued a proposal to refuse to issue a license to the company’s subsidiaries, The Cash Store and Instaloans, under the Payday Loans Act, 2008. The Cash Store and Instaloans will be requesting a hearing. The company is not currently permitted to sell any payday loan products in Ontario. As reported yesterday, the company is no longer offering any of its line of credit products in Ontario.

FinanceOntario […]

The Cash Store Financial Services Inc. provides Ontario regulatory update

EDMONTON, June 12, 2013 /PRNewswire/ – The Cash Store Financial Services Inc. (“Cash Store Financial” or the “Company”) (TSX: CSF; NYSE: CSFS) today announced that the Ontario Ministry of Consumer Services has filed an application to start legal proceedings against the Company in relation to the Company’s Basic line of credit product offering that was introduced on February 1, 2013.

In February 2013, the Company ceased offering payday loans in Ontario and began brokering the Basic line of credit as part of a wider initiative to offer a risk-based suite of Line of Credit products allowing customers to build credit and gain access to less costly funding.

The Company has pending an application for judicial review, seeking a declaration that certain provisions of the regulations made under the Ontario Payday Loans Act are void and unenforceable, which application is scheduled to be heard on October 2, 2013. The new application by Ontario seeks a declaration that the Basic line of credit is subject to the Payday Loans Act and that the Company must obtain a broker license to offer this product, irrespective of the validity of the regulations.

The Company remains committed to maintaining ongoing dialogue with the Ontario Ministry of Consumer Services with respect to its concerns and to making changes that further benefit consumers by helping them to build a better credit score, by providing them opportunities to reduce their short-term borrowing costs, and by allowing them greater flexibility than payday loans. Furthermore, the Company believes that its practice to offer the funding of advances by electronic methods provides a safer and friendlier environment for its customers and staff. However, the Company maintains that its operations in Ontario are in compliance with all applicable laws and intends to oppose the application by the Ontario Ministry of Consumer Services.

The Company will continue to provide further updates on material developments to regulatory matters as they occur.

About Cash Store Financial

Cash Store Financial is the only lender and broker of short-term advances and provider of other financial services in Canada that is listed on the Toronto Stock Exchange (CSF.TO). Cash Store Financial also trades on the New York Stock Exchange (CSFS). Cash Store Financial operates 513 branches across Canada under the banners “Cash Store Financial”, “Instaloans” and “The Title Store”. Cash Store Financial also operates 27 branches in the United Kingdom.

Cash Store Financial and Instaloans primarily act as lenders and brokers to facilitate short-term advances and provide other financial services to income-earning consumers who may not be able to obtain them from traditional banks. Cash Store Financial also provides a private-label debit card (the “Freedom” card) and a prepaid credit card (the “Freedom MasterCard”) as well as other financial services, including bank accounts.

Cash Store Financial employs approximately 1,900 associates and is headquartered in Edmonton, Alberta.

Cash Store Financial is a Canadian corporation that is not affiliated with Cottonwood Financial Ltd. or the outlets Cottonwood Financial Ltd. operates in the United States under the name “Cash Store.” Cash Store Financial does not do business under the name “Cash Store” in the United States and does not own or provide any consumer lending services in the United States.

Forward-Looking Information

This news release contains “forward-looking information” within the meaning of applicable Canadian securities legislation and “forward-looking statements” within the meaning of United States federal securities legislation, which we refer to herein, collectively, as “forward-looking information”. Forward-looking information includes, but is not limited to, information with respect to our objectives, strategies, operations and financial results, competition, as well as initiatives to grow revenue or reduce retention payments. Generally, forward-looking information can be identified by the use of forward-looking terminology such as “estimates”, “plans”, “expects”, or “does not expect”, “is expected”, “budget”, “scheduled”, “forecasts”, “intends”, “anticipates”, or “does not anticipate”, or “believes” or variations of such words and phrases or state that certain actions, events or results “may”, “could”, “would”, “might”, or “will be taken”, “occur”, or “be achieved”. In particular, this news release contains forward-looking information with respect to our goals and strategic priorities, introduction of products, share repurchase initiatives, branch openings and competition, as well as initiatives to grow revenue or reduce retention payments. Forward-looking information is subject to known and unknown risks, uncertainties and other factors that may cause the actual results, level of activity, performance or achievements of Cash Store Financial, to be materially different from those expressed or implied by such forward-looking information, including, but not limited to, changes in economic and political conditions, legislative or regulatory developments, technological developments, third-party arrangements, competition, litigation, risks associated with but not limited to, market conditions, and other factors described under the heading “Risk Factors” in our Annual MD&A, which is on file with Canadian provincial securities regulatory authorities, and in our Annual Report on Form 20-F filed with the U.S. Securities and Exchange Commission. All material assumptions used in providing forward-looking information are based on management’s knowledge of current business conditions and expectations of future business conditions and trends, including our knowledge of the current credit, interest rate and liquidity conditions affecting us and the general economic conditions in Canada, the United Kingdom and elsewhere. Although we believe the assumptions used to make such statements are reasonable at this time and have attempted to identify in our continuous disclosure documents important factors that could cause actual results to differ materially from those contained in forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or intended. Certain material factors or assumptions are applied by us in making forward-looking information, including without limitation, factors and assumptions regarding our continued ability to fund our payday loan business, rates of customer defaults, relationships with, and payments to, third party lenders, demand for our products, as well as our operating cost structure and current consumer protection regulations. There can be no assurance that such information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such information. Accordingly, readers should not place undue reliance on forward-looking information. We do not undertake to update any forward-looking information, except in accordance with applicable securities laws.

[…]

Cash Store: Ontario files lawsuit against payday loan operator | FP …

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The Ontario government has launched legal proceedings against The Cash Store Financial Services Inc., a publicly traded firm in the payday loan business, over its operations and licences.

The application to begin legal action in the Ontario Superior Court of Justice, filed by the Ministry of Consumer Services on June 7, asks the court to declare that by providing consumers with lines of credit, Cash Store is essentially in the payday loan business and is therefore subject to Ontario’s Payday Loans Act. At the same time, the government wants the court to order the company to obtain a payday loan broker licence.

The lawsuit follows in the wake of a decision by the consumer protection branch of Ontario’s Ministry of Consumer Affairs to revoke Cash Store’s payday lender licences on Feb. 4. Ontario served notice that it intended to strip the licence of the Edmonton-based company, which has 512 branches across Canada and 25 in the United Kingdom, because it alleges that by charging fees, it allowed Cash Store to end run the province’s maximum borrowing cap of $21 per $100 lent.

Cash Store disagreed, arguing that its lines of credit are not governed by the provincial act, and filed for a judicial review on April 29 seeking a declaration that the product is not a payday loan. Peter Block, a spokesman for the company, declined to comment further because the case is before the courts.

Related

Woes pile up for Cash Store as Ontario aims to revoke licenceCash Store Financial seeks appeal of proposal to revoke lending licences

Meantime, the provincial government issued an “alert” to consumers telling them of the investigation and reminding them of their rights.

Cash Store, which has faced similar challenges in Alberta, Manitoba and British Columbia, switched its line of business from offering payday loans to lines of credit, and in doing so, the company argued that lines of credit are not governed by the province’s Payday Loans Act.

Two years ago, the B.C. government fined the company $25,000 and demanded it refund “unlawful” fees paid by consumers. That hasn’t happened yet because Cash Store appealed.

Essentially, payday loan operators provide short-term funds or payday advances in small amounts, ostensibly to cover last-minute or emergency expenses. Typically, this type of loan is $1,500 or less for a maximum term of 62 days and the money is advanced in exchange for a post-dated cheque or some other form of pre-authorized payment.

On average, Canadians borrow $300 for a two-week term. According to Statistics Canada, about 3% of Canadian families have obtained a payday loan.

The bottom line: 1,350 players populate the Canadian industry that’s worth an estimated $2-billion annually. In the case of Ontario, where 750 of these companies operate, the Payday Loans Act was established in 2008, and amended in 2011 when the government worried lenders were getting around the maximum borrowing costs by charging fees.

The same is true in other provinces – except for Quebec, where payday loans are prohibited. Borrowing costs vary from province to province, for example, $25 per $100 in Nova Scotia, $23 per $100 in B.C., and $17 per $100 in Manitoba.

In the U.S., 15 states have an outright ban on payday loans while others have been introducing stringent regulation to curb them. Even so, the measures have not stopped the sector from expanding. According to The New York Times, three million Americans obtained short-term loans in 2011, amounting to US$13-billion, more than a 120% increase from US$5.8-billion in 2006.

[…]

Fuel Fights Expose Egypt’s Depleted Cash as Mursi Seeks IMF Loan

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For most of the past three months, Hamdi Othman’s days have begun like this: He gets up at dawn, lines up for hours for diesel, argues with fellow drivers and watches the occasional fight that breaks out.

“Our lives have become unbearable,” Othman, 54, who works for the state, shouted from his white bus. Around him were 16 other vehicles all waiting for diesel, a commodity in as short supply as patience in Egypt. “I’ve been a driver for the past 40 years, and I’ve never seen any crisis like this.”

More than two years after Cairo captured the world’s attention with the protests that led to the overthrow of former President Hosni Mubarak, the grievances that triggered them in the most populous Arab nation are stronger than ever.

Complaints about the fuel shortage, rising cost of food and electricity blackouts have replaced the initial hope of prosperity since Islamist leader Mohamed Mursi, 61, took power last year and promised to raise wages and end the cronyism and economic inequalities under his predecessor.

Instead, a shortage of hard currency and a widening budget deficit are undermining the economy and forcing the government to target the subsidies Egyptians rely on to afford basics.

“The social cost of any subsidy reform is going to be high,” said Hany Genena, head of research at Pharos Securities Brokerage in Cairo. “Consumers across the board, from households to companies, are going to be hurt.”

IMF Visit

An International Monetary Fund team will arrive in Egypt today to discuss the $4.8 billion loan sought by the government, cabinet spokesman Alaa El-Hadidi said on March 31. Planning Minister Ashraf El-Arabi said yesterday in Dubai the government expects an initial accord by the end of the visit.

The government is cutting spending in a plan outlined as part of an effort to secure the funds, which it sees as key to unlocking other aid. The budget deficit is projected at 10.9 percent of gross domestic product in the current fiscal year and at 9.5 percent the following, according to the Finance Ministry.

Egypt subsidizes everything from gasoline to bread to keep prices lower than if they were exposed to the effect of import costs. The program consumes roughly a quarter of state spending.

Foreign-currency reserves have plunged by more than 60 percent since December 2010 to $13.5 billion at the end of February, according to the central bank. At about 2 percent in 2012, economic growth is at its slowest pace in two decades. GDP rose 5 percent in 2010, the year before Mubarak was ousted, while unemployment is at 13 percent.

Doubling Prices

Inflation meanwhile is accelerating as the Egyptian pound weakens and daily protests mushroom into violence. The pound has lost 6.6 percent of its value against the dollar this year, more than any other Middle Eastern currency, doubling the cost of diesel based on black-market prices.

Protesters, including butane dealers, demonstrated outside the Supply Ministry yesterday, hours after the Oil Ministry doubled the price of the subsidized canisters used by households to 8 Egyptian pounds ($1.18) and for businesses to 16 pounds. The increases prompted some distributors to refuse to accept their quotas, fearing public backlash when they sell them at the new price, the Al-Shorouk daily reported yesterday.

Much of the criticism against Mursi has been about the lack of tangible improvements in daily lives since the uprising. His critics contend that Mursi has focused on bolstering the Muslim Brotherhood that fielded him for office, and is seeking to replace one authoritarian regime with another.

‘Paupers’

Salah Fouad, a 53-year-old minibus driver, said he’s often forced to park his vehicle because he can’t get the needed fuel. Each day he is unable to work, Fouad said he can’t bring home money for his seven children.

“We are almost starving,” said Fouad, putting the blame on Mursi. “We are going to become paupers.”

The ill-tempered lines aren’t limited to demand for fuel. Bakers of subsidized bread have protested against a government push to keep them producing the low-cost loaves on which the majority of the country’s more than 84 million people rely, while their costs are rising. The Supreme Constitutional Court ruled in March that it was illegal for the bakeries to turn their operations into private businesses.

At the heart of the strife, like under Mubarak’s 30-year rule, is the government’s ability to pay.

Rolling blackouts in Cairo and elsewhere in the country have already begun, an omen for the peak summer months when air conditioning drives up demand.

Vicious Circle

The Electricity Ministry has said part of the blame lies with the Oil Ministry, which it maintains has failed to deliver the needed fuel to power the plants. The Oil Ministry, in turn, has said it is owed billions of pounds for fuel already supplied and that it, too, has bills to pay.

State-run Egyptian General Petroleum Corp. is struggling to pay foreign energy companies, while also trying to cope with the cost of fuel imports.

“The most important thing is to cover our essentials,” central bank Governor Hisham Ramez told reporters yesterday. “Once things start moving, the market will go back to normal and supply and demand will be met.”

The Egyptian General Petroleum Authority got about $6.45 billion in funds from the central bank in 2012, more than twice the amount it received a year earlier, according to a table posted on the bank’s website outlining foreign funds it provided to the government. The amount provided to the General Authority for Commodities, which imports wheat for the subsidized bread, dropped 12 percent last year to $2.52 billion.

Scarce Money

It’s money Mursi’s government can ill afford when investment and tourism, two key sources of foreign revenue, have yet to rebound to anywhere near their pre-uprising levels.

The country’s political battle the past two years contributed to a decision by Moody’s Investor’s Service to lower Egypt’s credit rating to Caa1 on March 21, putting it on par with Pakistan, while the central bank raised its deposit and lending rates by 50 basis points for the first time since November 2011.

The request for the IMF loan was again delayed late last year amid mounting outrage over both Mursi’s attempt to impose new taxes and fallout from his efforts to temporarily shield his decisions from court review in a bid to push through a contentious, Islamist-backed constitution.

The charter was approved and the president pushed ahead with new parliamentary elections initially planned for this month. That effort has also run aground amid court challenges to his decree setting the date for the vote, which opposition parties had said they would boycott.

Running Dry

“Within three months, things in Egypt may come to a head as foreign reserves are depleted and the country needs to purchase more wheat,” Hani Sabra, a Mideast analyst at Eurasia Group in New York, said in an e-mail. “Egypt’s currency reserves, already less than ‘critical,’ may run dry.”

Fuel is particularly touchy for the government because it accounts for almost 85 percent of total subsidies, according to Hossam Arafat, head of the Federation of Chambers of Commerce’s Petroleum Products Division in Cairo.

Diesel subsidies account for as much as 55 billion Egyptian pounds of the spending, compared with 20 billion pounds each for gasoline and butane gas, Arafat said.

Arafat attributes the shortage to a cash crunch, while Oil Minister Osama Kamal has said that smuggling is a factor.

Sayed Adel, who drives a pick-up truck delivering milk, said he’s been routinely offered fuel on the black market, at almost double the rate at gas stations. Officials have been struggling to deal with the issue, though their efforts have been impeded by worries over popular backlash.

Avoiding Fights

“For those who can’t take the fights, they just have to go and buy it on the black market,” Adel said.

Egyptian police arrested the manager of an oil-product company after initial investigations showed he sold 5.53 million liters of diesel on the black market since the start of the year, the state-run Middle East News Agency said yesterday.

The government has discussed possible ways of revamping the subsidy system, including introducing smart cards or coupons with quotas for commodities like fuel and bread.

The parliament’s upper house, the de facto legislature until new elections are held, rejected Mursi’s proposal to ration fuel with smart cards, the Al-Borsa newspaper reported on March 21. The legislature said it would have “dangerous consequences.” It suggested handing out cash instead of the subsidies, the daily reported.

That would mirror Iran, which in December 2010 introduced a five-year program to cut food and energy subsidies while trying to offset the impact by handing out cash to those in need.

Reducing Poverty

The second phase of the program was put on hold as the currency weakened and inflation quickened. The IMF said in a July 2011 report the implementation of Iran’s first stage lowered the incidence of poverty to 2 percent of people from 12 percent on the basis of a $2 per day poverty line.

Egypt, though, doesn’t have the financial resources of oil- producing Iran, albeit a country subject to international sanctions. The government also must contend with a society that’s becoming increasingly agitated.

The smart card technology can be activated within days, “but it’s a matter of whether the street is ready for such a thing,” Kamel, the oil minister, told reporters on March 25.

Even Mubarak’s government “didn’t dare approach this issue,” even though they had the full backing of the police and ruled with an “iron fist,” he said.

What’s also needed are “safety nets, either in the form of foreign aid, good economic conditions or a popular government,” said Genena, the analyst at brokerage Pharos. “Any reform program executed in the absence of safety nets will backfire at a time when people are facing real income compression. The timing cannot be worse.”

Back at the fuel line in the working class Cairo neighborhood of Shoubra, Othman blasts his horn and shouts to stop other drivers from cutting in front.

“We’ve never witnessed anything like this,” he said. “Even at the time of Mubarak, there wasn’t such a crisis.”

To contact the reporters on this story: Ola Galal in Cairo at ogalal@bloomberg.net; Tarek El-Tablawy in Cairo at teltablawy@bloomberg.net

To contact the editor responsible for this story: Andrew J. Barden at barden@bloomberg.net

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Fuel Fights Expose Subsidy Struggle as Egyptian Economy Stumbles

Khaled Desouki/AFP/Getty Images

An Egyptian man directs a truck as drivers line up to buy fuel at a gas station in Cairo.

An Egyptian man directs a truck as drivers line up to buy fuel at a gas station in Cairo. Photographer: Khaled Desouki/AFP/Getty Images

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President Mohamed Mursi

Jin Lee/Bloomberg

Much of the latest criticism against President Mohamed Mursi has focused on claims that he and the Muslim Brotherhood that fielded him for office are seeking to replace one authoritarian regime with another.

Much of the latest criticism against President Mohamed Mursi has focused on claims that he and the Muslim Brotherhood that fielded him for office are seeking to replace one authoritarian regime with another. Photographer: Jin Lee/Bloomberg

[…]

First Gulf Bank Settles Government Loan Taken During 2008 Crisis

First Gulf Bank PJSC (FGB), a lender controlled by Abu Dhabi’s ruling family, repaid a 4.5 billion- dirham ($1.23 billion) loan to the government almost four years early after its cash holdings jumped.

The bank settled the entire amount owed to the United Arab Emirates Ministry of Finance yesterday by drawing on its “strong” cash reserves, First Gulf said in an e-mailed statement today. The loan was part of a 70 billion-dirham deposit program the government set up in the early days of the 2008 global credit crisis to help lenders cope with the fallout.

U.A.E. banks are recovering after the crisis triggered a slowdown in investment banking and a real estate crash led to a surge in non-performing loans. First Gulf Bank, which posted a 12 percent advance in profit last year, had cash reserves of 12.8 billion dirhams at the end of 2012, up 34 percent from the year earlier, according to data compiled by Bloomberg.

“The government’s timely and supportive decision allowed the U.A.E. economy to maintain its growth at a time when the global economic scene was facing difficult times,” Andre Sayegh, the chief executive officer, said in the statement.

Government assistance took the form of deposits, which lenders had the option of turning into subordinated loans eligible to be classified as Tier II capital.

Interest on First Gulf’s loan, which was initially due in December 2016, was scheduled to rise gradually from 4 percent in the first two years to as high as 5.25 percent from the fifth year onward, according to the lender’s 2009 annual report.

To contact the reporter on this story: Arif Sharif in Dubai at asharif2@bloomberg.net

To contact the editor responsible for this story: Alaa Shahine at asalha@bloomberg.net

[…]

Ontario wants to revoke licence of payday cash stores

CBC News has learned that the Ontario government is going to try to revoke the licence of Cash Store Financial Services, one of the biggest cash advance stores in the country.

The Ontario Ministry of Consumer Affairs alleges that the company broke Ontario’s Payday Loans Act, which limits the fees payday loan companies can charge.

Cash Store Financial Services has 200 outlets in Ontario alone: branded as InstaLoans and The Cash Store.

They operate in 19 different communities in the province.

The Ministry of Consumer Services alleges the company is guilty of “several violations” the Act. It says Cash Store has charged customers interest rates higher than the maximum allowed, or charged prohibited fees.

The ministry is asking a provincial tribunal to revoke the company’s licence.

Government officials are calling this a “major consumer protection enforcement action” and say they will release more information on Wednesday.

Executives at Cash Store’s head office in Edmonton did not return calls from CBC News seeking comment.

The province brought in the Payday Loans Act in 2008 — designed to stop companies from charging exorbitant interest rates or hidden fees when lending money to the working poor.

[…]

Fertiliser companies likely to get Rs 5,000-cr loan


Fertiliser companies likely to get Rs 5,000-cr loan

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chemicals fertiliser
government policy

New Delhi, Jan 24:

Facing acute cash crunch, the Fertiliser Ministry will arrange for Rs 5,000 crore bank loan for fertiliser companies who have not been paid full subsidy for about six months. While loan would be taken by the companies, the government will bear most of the interest they would have to pay for such borrowing, sources said.

They added that the banking arrangement would be similar to the one offered in 2008—09, when the Ministry had faced a similar situation of lack of funds to pay for subsidy. This will help urea and other fertiliser manufacturing units to tied over immediate cash flow problems that have arisen because of non-payment of full subsidy.

As per exact policy, fertiliser firms get subsidy from the government for selling their produce to farmers at rates which are way below their cost of production.

“Finance Ministry has approved fertiliser ministry’s proposal of special banking arrangement of Rs 5,000 crore for fertiliser manufacturers,” sources said adding the proposal in this regard will be moved to the Cabinet Committee on Economic Affairs (CCEA).

The amount approved by the Department of Expenditure is much lower than the Fertiliser Ministry’s proposal for a “special banking arrangement” of Rs 25,000 crore. Fertiliser subsidy is estimated to touch Rs 1,04,000 crore in this fiscal, which also includes arrears.

According to industry body Fertiliser Association of India (FAI), “the budget allocation of Rs 60,974 crore for fertiliser subsidy as approved by Parliament has already been exhausted. An estimated amount of Rs 19,000 crore subsidy payment is outstanding for the period till October, 2012.”

Fertiliser Ministry has not paid the subsidy bills for phosphatic and potassic (P&K) fertilisers like muriate of potash (MoP) and di-ammonium phosphate (DAP) since July and for urea since August.

“After the CCEA approval, Fertiliser Ministry will divide this amount among fertiliser firms and the interest on the bank loan, to be provided by the public sector banks, will be largely borne by the ministry,” an official said.

The ministry would bear up to 8.5 per cent interest rate and over and above this will be paid by the companies, the official added.

The total loan would be paid to the banks by the ministry once it has been allocated funds for the next fiscal.

On an average, India consumes about 30 million tonnes of urea and around 25—26 million tonnes of DAP, MoP and complex fertilisers annually.

Keywords: Fertiliser Ministry, Cabinet Committee on Economic Affairs, bank loans to fertilisser companies

[…]