12 global cos evinced interest to shift base from China to India: FM

MUMBAI: Finance minister Nirmala Sitharaman on Saturday said about 12 global companies have evinced interest to shift their base from China to India, taking advantage of competitive tax rate of 15 per cent announced recently.

In the biggest reduction in 28 years, the government in September reduced corporate tax rate by almost 10 percentage points in a bid to give a boost to the sagging economy.

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Base corporate tax for existing companies has been reduced to 22 per cent from 30 per cent, and for new manufacturing firms incorporated after October 1, 2019 and starting operation before March 31, 2023, it was slashed to 15 per cent from 25 per cent.

“I had said that I will form a task group, which will look into those companies which want to get out of China, and in the meanwhile I announced the corporate tax cut. There were many companies which were showing interest and wanting to come back.

“So, this task force has already started contacting many of these companies. The last count, I came to know was about 12 of them have already been spoken to, their minds understood, their expectation listed out so that the government can come up with a concrete offer for them to shift from where they are now, so that the ecosystems can get built here, new industries can come,” she said.

The minister said the word that was given for bringing newer industries, which are moving out of China, is actively moving forward.

“And I am sure, I will be able to report some progress on that,” she added.

With regard to the investment of Rs 100 lakh crore in the next 5 years, she said the task force will come out with a list of 10 major infrastructure projects by December 15 and that investment in these projects would be front-loaded.

“We made sure that a set of officers were looking into pipeline that can be readied, so that once the fund is ready and it will be front-loaded…that task is near completion,” Sitharaman said.

Before December 15, she said the government will be able to announce the front-loading of at least a 10 major projects.

The finance ministry in September set up a task force headed by Economic Affairs Secretary to prepare a road map for the “national infrastructure pipeline” from 2019-20 to 2024-25 under a Rs 100 lakh crore infra plan. The task force expected to cover greenfield and brownfield projects costing above Rs 100 crore each.

The finance minister also listed some of the measures taken by the government to boost consumption and liquidity in the system since August this year.

Talking about the GDP growth rates, she expressed hope that the next numbers should be better.

India’s growth falling to a more than six-year low of 4.5 per cent in the second quarter of 2019-20 is sub-optimal and below the potential of the economy, the industry pointed out.

During the loan outreach programme in October, public sector banks have disbursed more than Rs 2.5 lakh crore, the finance minister said while outlining various measures taken by the government to revive economy.

“They (banks) reached out to 400 districts, literally the hinterland where the money went. And as a result, now I can see somewhat that kind of spend has helped in somewhat reviving the consumer spirits and purchases have gone up and I also hope that it will lead to improvement in tax collections,” she said.

She, however, said the progress on partial guarantee scheme is not very satisfactory.

“I’d like to draw your attention to the partial guarantee scheme which we brought in, so that all the pooled assets could be bought over by the banks and for which the government would give the partial guarantee with a minor haircut… A lot more is going to be done on that and I admit that things have been a bit slow,” she said at the Ecnomic Times Award event here.

To ensure transparency in the taxation, Sitharaman said that faceless assessment has been introduced in direct tax, and indirect tax too will have this system soon.

“And the last word on GST. The systems are really being worked on so that it becomes as simple as we claim it to be. We would further like to simplify it,” she said.

As regards the rationalisation of the taxation, she said, “We are having a good conversation with all the states and want to make sure that those essential items may be put to the lowest if not exempt, but for the rest of them, we are trying to rationalize”.

Are bank algorithms sexist? How tech might be working against women

To be approved for a credit card or limit increase, banks often check your payment history, income and credit score. 

But a financial scandal that rocked Apple in November shows gender may also be factor. In fact, reports showed AI technology was making these discriminatory decisions. 

Software developer David Heinemeier Hansson exposed these issues on Twitter when he looked at the stark differences in credit limits between him and his wife.

When applying for a credit limit increase for her Apple Card, Hansson’s wife Jamie was denied, despite having a higher credit score than him. 

READ MORE: New York regulator says it will probe possible bias in Apple Card credit limits after viral tweets

Hansson tweeted Apple Card had a “sexist program.”

“My wife and I filed joint tax returns, live in a community-property state, and have been married for a long time,” said Hansson. “Yet Apple’s black box algorithm thinks I deserve 20 [times] the credit limit she does.”

Even when she paid off her balance in full, the Apple Card wouldn’t approve any spending for his wife until the next billing period. “Women apparently aren’t good credit risks,” Hansson tweeted.

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He also explained his frustration that multiple customer service representatives with Apple had no understanding of why his wife wasn’t approved. They blamed “the algorithm”. 

Increasingly, multiple industries worldwide are using artificial intelligence algorithms to help with processes, from hiring, to sentencing, to translation software. Apple is using one to determine who gets approved for their credit programs.

But murmurs about discrimination due to the use of these algorithms has hit multiple industries, and now has swept banking.

Hansson’s Twitter thread led to hundreds of responses from people who said they’ve experienced something similar, either with Apple or at other banks. Even Apple co-founder Steve Wozniak said there were inconsistencies between his and his wife’s account.

“Hard to get a human for a correction though. It’s big tech in 2019,” said Wozniak.

Now, The New York Department of Financial Services has gotten involved by opening up an investigation into whether Goldman Sachs, the institute behind the Apple Card, is engaged in discriminatory practices.

READ MORE: Statistics Canada hits pause on plan to obtain banking records, halts TransUnion credit requests

The investment bank addressed the controversy stating that no credit decisions are based on factors like gender and they will be reviewing their credit process with a third party.

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After the tweets, Jamie Hansson’s credit limit was raised. But that doesn’t address the core of the issue, Hansson said.

“What’s even worse is how complete and unquestioned the faith of these Apple reps were in the wisdom of the algorithm,” he said. 

“Which won’t be explained, can’t be appealed, and is simply assumed to be correct because all faith is in the mighty machine.”

Algorithms ingest flawed, sexist data

The shock online about Apple’s seemingly bias algorithm didn’t surprise Meredith Broussard, a New York University professor and author of Artificial Unintelligence: How Computers Misunderstand the World.

“For a long time, people have had this idea that algorithms are somehow more objective or more unbiased than people. And this idea is wrong,” she said. 

The belief that algorithms are entirely neutral in their decision making is what Broussard calls “technochauvinism”. Algorithms work by taking data about the world as it is, and then creates a model that essentially mirrors that world, she said.

“That means all of the existing inequality in the world gets reproduced inside these automated systems,” she explained.

In the U.S., there’s a long history of credit inequality between men and women. Many married women were not able to acquire credit or even have a bank account without their husband’s permission. Until 1975, women in the U.S. who were single, divorced or widowed needed a man to co-sign their applications.

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In 1964, women in Canada were allowed to opening a bank account without their husband’s signature. 

Discussing the controversy around female servers’ attire

Discussing the controversy around female servers’ attire

The data that algorithms are ingesting today still have echoes of the past, including the current gap in income equality, said Broussard.

Although the wage gap has narrowed in the last 20 years, women aged 25 to 54 in Canada earned $0.87 for every dollar earned by a man in 2018, according to Statistics Canada. These numbers are often even lower for women of colour and Indigenous women.  

“Men still earn more money than women overall,” she said. “If you’re just mathematically saying, who is a better credit risk, who makes more money? It’s always going to look like the man.”

The Canadian Human Rights Act prevents against discrimination, which would cover credit applications. 

But in order to potentially make a complaint if an algorithm made a discriminatory choice, the nature of the technology means it’s unclear where or how the AI made it decisions. 

Apple announces TV streaming service, credit card

Apple announces TV streaming service, credit card

“When there is discrimination in the code, it’s hard to see and it’s almost impossible to erase,” said Broussard. “These models are opaque because you can’t see inside of them, and you can’t audit them.”

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It’s hard to appeal a decision made by a computer because you won’t know the reasoning behind it, she said, adding that financial firms in the U.S. are highly regulated and care about compliance.

“I don’t think they’re purposely trying to discriminate,” she said.

“They’re pretending that their math is better than the social systems that were previously set up, and it’s not.”

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With the lack of current regulations, the onus is on consumers to detect whether an algorithm has been bias, says Suzie Dunn, a PhD candidate at the University of Ottawa whose research focuses on law, gender and technology.

READ MORE: Chase Bank to its Canadian credit card holders: ‘you owe no balance’

“The discriminatory effects of an algorithm need to be discovered by someone,” she said, adding that banks and other bodies using AI should know if there’s an issue with the program before it harms a customer.

Marginalized groups will be the most impacted by these kinds of algorithmic errors, she said. Federal and provincial human rights policies provide protection, but often you have to prove that discrimination has occurred.

“With AI, it really complicated how you’re able to demonstrate that you’re being discriminated against,” she said. 

However, if an algorithm is faulty, it’s on the business to figure out exactly what the problem is, she said.

“If that business is relying on A.I., they’re still responsible if the AI is discriminatory, in the same way if one of their service representatives were to discriminate,” she said. 

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“Just because we’re using [algorithms] doesn’t mean that human rights no longer exists or that consumer rights no longer exist.”

Canadian regulations aren’t up to date to protect consumers

It would come as a surprise if Canadian banks didn’t use algorithms for certain aspects of banking, like percentage of income allowable to service debt, says Marua Grossman, director of Women in Computer Science at the University of Waterloo.

It’s also likely they are using machine learning to assess whether or not someone is worthy of credit, she said. But it’s difficult to know as it’s proprietary information banks don’t disclose. 

There’s a need for more discussion between regulators and those who work in tech when it comes to new technology, she explained.

“We do not have a consensus on what it means for an algorithm to be ‘fair,’ and we can’t entirely rid algorithms of bias that exists in historical data,” she said.

READ MORE: Canadians have little ability to determine if StatCan has their personal banking info: experts

In order for there to be more oversight, without stifling technological advances, input is needed from legislators and those who work in tech.

“[The tech industry] is not necessarily trained to consider the social policy impact of the output of algorithms,” she said. 

For Canadians, the concerns around bias in credit approval practices go beyond issues with this kind of new technology, says Stephanie Ben-Ishai, professor at Osgoode Hall Law School at York University in Toronto. 

“There’s very little regulation on the practicals around credit ratings and credit rating agencies as it is,” she said. “In a pre-AI world, there were already challenges.”

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The Financial Consumer Agency of Canada is responsible for enforcing consumer protection legislation and provides information about your rights when it comes to credit and loans.

They also provide a contact if you feel your rights aren’t being respected

But there isn’t a policy within Canada’s financial regulatory structure that says you can’t discriminate against people based on gender when it comes to lending, she said. 

“[Apple Pay] is just the current iteration of the lack of transparency about practices around lending … and the fact that we have weak regulators in the Canadian context,” she said.

Regulators are always playing catch-up to technological innovations, creating challenges, she added.

“As we rely increasingly on things like machine learning, we need to make sure that the data that is fed in is good data,” she said.

“The only way we can do that is being more transparent to people about the data we’re creating and collecting about them, and putting limits and checks and balances on that.

 

Olivia.Bowden@globalnews.ca


© 2019 Global News, a division of Corus Entertainment Inc.


Maruti crosses 20 mn passenger vehicle sales mark

NEW DELHI: The country’s largest car maker Maruti Suzuki India on Saturday said it has crossed milestone of 20 million passenger vehicle cumulative sales in the Indian market. The company accomplished this landmark number in less than 37 years of selling its first car on December 14,1983, when it first rolled out the iconic Maruti 800, Maruti Suzuki India (MSI) said in a statement.
The company said while it crossed 10 million vehicle sales in nearly 29 years, the next 10 million passenger vehicles were sold in a record time of 8 years.

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Commenting on the milestone, MSI managing director & CEO Kenichi Ayukawa said, “We are overwhelmed with this new record. Achieving this milestone is a great accomplishment for Maruti Suzuki, as well as our suppliers and dealer partners”.
MSI said it has introduced factory fitted CNG vehicles as well as smart hybrid vehicles, in addition to eight BS6 models rolled out much ahead of the stipulated timelines.

It along with its parent, Suzuki Motor Corporation, plans to introduce a small EV for the Indian market. Currently, it is road testing 50 electric vehicle prototypes across the country to check their real-life performance in multiple terrains and varied climatic conditions, it added.

Pay $4,300, get $1,750 back after 3 years. One man’s cautionary tale about ‘savings loans’

Cody O’Day wanted to borrow money to buy furniture to set up an Airbnb. Instead, he ended up with a loan contract stipulating he would have to pay nearly $4,300 in order to receive $1,750 only after three years.

O’Day signed up for what some call a “credit-repair loan” or “secured savings loan,” in which borrowers receive no money upfront but must make regular payments. Lenders usually release funds either at the end of the loan period or gradually, as they receive deposits.

READ MORE: Have you heard about savings loans? Think carefully before signing up for one

Savings loans are a relatively new financial product in Canada that some lenders are marketing as a way to help borrowers with a bruised or non-existent credit history. But the loans often come with high interest rates and fees.

O’Day, for example, stood to pay around $1,800 in fees over three years on top of an annual interest rate of 17.99 per cent, according to a copy of his loan agreement reviewed by Global News. The annual percentage rate (APR) of the loan, which reflects the full cost of borrowing including fees, was more than 39 per cent.

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Worse, O’Day said he didn’t want that kind of loan at all.

Cody O’Day, above, said he never intended to sign up for a secured savings loan, which does not provide upfront cash for borrowers.
Cody O’Day, above, said he never intended to sign up for a secured savings loan, which does not provide upfront cash for borrowers. Photo courtesy of Cody O’Day

A 29-year-old carpenter in Kamloops, B.C., O’Day said he was hoping to obtain a loan for debt consolidation and for a home renovation to set up a short-term rental that would help him boost his income. With a low credit score, he said he knew he wouldn’t qualify for credit from a mainstream financial institution. So he was prepared to pay a high interest rate to an alternative lender.

But when he called Fresh Start Finance, which offers loans of up to $15,000, in mid-November, he said he was transferred to Spring Financial, which set him up for a savings loan instead. Both companies are part of the Canada Drives Group, which operates a number of consumer finance brands across Canada.

O’Day said he believed he had signed a loan of $2,300, of which he would get $1,750 upfront, which would cost him a total of around $4,300 in interest and fees over three years.

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The loan contract seen by Global News clearly states on the first page “you will not get access to any money upfront.” But O’Day said he signed it without reading it while on lunch break at work. He also acknowledges the agent who set up the loan on the phone told him he would not receive funds in advance. However, he said he had at times trouble hearing the conversation because of background noise in his shop. He also said he told the agent he couldn’t hear very well.

READ MORE: Need cash in a hurry? Here are the best and worst ways to get it

It was only later, upon reviewing the terms of the contract and a recording of the call, that O’Day said he realized he wouldn’t receive the money until the end of the loan period.

When he reached out to both Fresh Start and Spring Financial and asked them to cancel the loan, he said he was repeatedly told that wouldn’t be possible.

Spring Financial ultimately agreed to close the account on Nov. 23, before the first payment was due.

“The borrower has not made any payments and no payments are due to be debited from their account,” Tyler Thielmann, vice-president of consumer lending at Canada Drives, told Global News via email.

According to O’Day, the decision by Spring Financial came at the end of a phone call in which he mentioned he had contacted Global News as well as a lawyer.

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Insolvency trustee calls the loan ‘predatory’

Documents seen by Global News show O’Day was supposed to pay $55 by-weekly for a total of $4,297 over three years.

That sum included a $2,300 “total loan amount” made up of the $1,750 O’Day would eventually get back, plus a setup fee of $550. The total estimated interest over the loan term would have been $676. In addition, O’Day also stood to pay $604 for a loan payment protection plan and $682 for credit monitoring. Interest and fees would have amounted to around $2,500 over the course of the three years.

READ MORE: 7 common mistakes that explain why you never have enough money

The payment protection plan and the credit monitoring service are optional and can be cancelled at any time by providing written notice to Spring Financial, according to the contract. Borrowers can also prepay the total loan amount and any interest accrued at any time without penalty, the documents show.

Still, licensed insolvency trustee Doug Hoyes, who reviewed a copy of the agreement with O’Day’s consent, said the terms of the loan are very aggressive.

“I would define it as predatory.”

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A quick way to build credit?

Canada Drives, for its part, calls savings loans an alternative to payday loans.

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“This loan gives many Canadians the opportunity they need to rebuild their credit, start qualifying for reasonable interest rates, and most importantly avoid the downward spiral of payday loans,” Thielmann wrote.

Savings loans lenders acknowledge that there are other ways for consumers to build or rebuild their credit from scratch, but generally argue savings loans are a much-needed financial innovation that can help struggling borrowers.

READ MORE: 3 things you probably didn’t know about your credit score

For example, Canadians can turn to secured credit cards, which are backed by a security deposit. This means a credit card with a $1,000 limit may require a borrower to deposit $1,000 with the credit card issuer, which can use the money to cover any missed bill payments.

Thielmann said Canada Drives recommends secured credit cards and refers clients to companies that offer them. Savings loans, however, in which borrowers must make regular payments, are a different type of credit, he noted.

“Banks and lenders generally like to see experience with both types of credit when reviewing credit applications,” he wrote.

Thielmann also noted that some consumers are unable to come up with even the small down payments required to obtain a secured credit card.

“With the SSL [secured savings loan] a customer does not need to provide a lump sum payment or deposit in order to build credit.”

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Hoyes told Global News savings loans might help some borrowers lift their credit score fast. Instead of saving up for the deposit on a secured credit card, borrowers start making small payments right away, which may reflect positively on their score.

READ MORE: By the numbers — How to reduce your debt when you can’t repay

Spring Financial says it reports all payments to credit bureaus TransUnion and Equifax.

However, Hoyes said, borrowers are often paying a hefty price for that quick credit score boost.

Global News reporting indicates secured credit cards are generally far cheaper than savings loans. Canadians can apply for secured credit cards that cost less than $100 a year in fees and charge interest of 20 per cent or less, according to financial products comparisons site RateHub.ca. And if consumers pay off their balance on time, they won’t incur any interest charges, Hoyes noted:

“What you are paying for with [savings loans] is speed. … Is it worth it?”

There is no guarantee that taking out a savings loan will have a positive impact on a borrower’s credit, something that was clearly spelled out in O’Day’s contract.

“Banks and other potential creditors may view a borrower having too many loans as an increased risk,” the document reads.

Equifax told Global News that “there is no magic bullet or single type of credit account that will build a robust credit history.”

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There is also no single “standard” or “master” credit score version. Different lenders have their own credit score versions. The impact of a particular credit account often varies from applicant to applicant based on the other information on their credit file at the time their credit score is calculated, Equifax Canada director of consumer advocacy Julie Kuzmic said via email.

“Developing a favourable credit history and improving an individual’s credit score takes time and the single most impactful thing an individual can do is to pay their bills of all kinds (mortgages, loans, credit cards etc.) on time, every time,” Kuzmic said.

What is the best way to consolidate debt?

What is the best way to consolidate debt?

No ‘cooling-off’ period

Regardless of whether a savings loan would have helped his credit score or not, O’Day said he never intended to enroll in one. But when he tried to get out of it, he faced an uphill battle, he said.

The loan agreement reviewed by Global News does not provide for a so-called “cooling-off” period, a short period of time during which applicants are allowed to request that the contract they signed be voided.

In British Columbia, where Canada Drives is based, such a provision is mandatory for payday lenders, which must allow borrowers to cancel a loan by the end of the next day in which they are open for business.

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READ MORE: 5 signs you need help with your debt

Recordings supplied by O’Day suggest agents at Fresh Start and Spring Financial repeatedly told him over the phone that his savings loan could not be cancelled. Global News has not been able to independently verify the accuracy of the audio files.

In the call O’Day said was to Fresh Start, which originally referred O’Day to Spring Financial, a person who identifies herself as a manager at the company fails to provide O’Day with an opportunity to cancel the loan, despite his numerous requests. O’Day says that call took place Nov. 18.

In a call that O’Day said took place on Nov. 23, a person who identifies herself as a Spring Financial agent eventually agrees to close the account. However, the second recording also contains what appear to be several initial denials of the customer’s request to void the loan.

“Listen, I have this thing. I don’t want it. I was misled and I don’t want it. So can we cancel this or not?” O’Day says in the call.

“We can’t cancel,” the other person responds.

Later on in the conversation, the same person can be heard saying: “At the end of the day, the problem is you signed these documents.”

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“If you misunderstood the product, that’s out of our hand,” she also says.

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Canada Drives’ Thielmann said the company is unable to comment on the accuracy or validity of the recordings.

He added that Spring Financial is willing to close loans for customers “as a goodwill gesture,” as long as this happens before their first payment is processed. First, however, the company will transfer customers to its “retention department” to try to “re-educate” them about their financial situation and why they were unable to obtain traditional credit, as well as the benefits of a savings loans, he told Global News.

READ MORE: Here’s what happens to $1K in credit card debt when you make only minimum payments

Thielmann also said that Spring Financial savings loans agreements have plain language disclosure about the conditions of the loans on the first page and throughout the document. Borrowers are required to initial each of the key disclosures. In addition, an agent will verbally repeat multiple times to the borrower that they won’t receive any funds up front, he noted.

“Our intent is that every borrower has a complete and accurate understanding of the [secured savings loan],” he wrote. The company does this by providing ongoing and in-depth training to all its agents, providing an online help centre, welcome emails, payment reminders and customer care for clients who have questions after taking out the loan.

Money123: How much your credit card balance is really costing you

Money123: How much your credit card balance is really costing you

A loan to pay another loan

In the recording of the call with Fresh Start that O’Day says took place on Nov. 18, the B.C. man’s interlocutor can also be heard saying that many borrowers pay off the total loan amount of a savings loan well before the three-year term, often by taking out another, traditional loan if their credit situation improves enough for them to be able to qualify for one.

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While borrowers may be able to obtain cash loans from any lender, Fresh Start would be happy to help, the person in the recording is heard telling O’Day.

“We are obviously working to be able to help you get approved for a separate cash loan. Because that’s where we make the majority of our money because we are primarily a lending company,” the person said.

Thielmann said after making timely payments on their savings loans for 12 to 18 months many customers are able to access credit from mainstream lenders or Spring Financial.

“In either case, at this point we will happily close out the customer’s [secured savings loans] with no outstanding balance or fees,” he said. “Borrowers do not need to take out another loan in order to close out their [savings loans].”

He added that Canada Drives companies frequently refer customers to each other.

“Our goal is to connect all applicants with the products that are best suited to their situation. When a customer applies with any of our brands they agree to receive offers from the companies in our group or other third parties that we are partnered with,” he wrote.

Money 123: Understanding rent-to-own

Money 123: Understanding rent-to-own

Lack of regulation

Savings loans may not be “entirely a bad thing,” according to Stephanie Ben-Ishai, a professor at York University’s Osgoode Hall Law School.

They may be a way for high-risk borrowers to demonstrate their ability to make payments over a period of time, she said. And lenders who cater to customers with poor credit or no credit history necessarily have to offer more expensive loans, she noted.

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However, some installment loans remain lightly regulated, she added. While provinces have tightened regulations around payday loans over the past decade, “one way to get around that regulation, is to not offer payday loans, but instead to offer different kinds of products,” she said.

There’s a gap in regulation, basically, there.”

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The B.C. government is currently working on regulating high-cost loans and boosting protections for consumers. The new rules will create borrower rights and remedies, set disclosure requirements, and prohibit certain fees, among other things, according to the Ministry of Public Safety and Solicitor General.

In the meantime, though, consumers like O’Day are fending for themselves.

While he is “relieved” that is own savings loan account was closed, “I feel bad for anyone who is stuck in these,” he said.


© 2019 Global News, a division of Corus Entertainment Inc.


Q3 GDP to be worse: Chidambaram

NEW DELHI: Senior Congress leader P Chidambaram on Saturday said the lower GDP growth rate of 4.5 per cent was as predicted but warned that third quarter will be worse.

India’s economic growth slipped further to hit an over-six-year low of 4.5 per cent in the July-September quarter, according to official data released on Friday.

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GDP growth falls below 5%, to 4.5%, lowest since March 2013

India’s economy grew at its slowest pace in 26 quarters in the July-September period of the current fiscal year, dragged down by contraction in the crucial manufacturing sector. Data released by National Statistical Office showed GDP grew by 4.5% in the September quarter, the lowest since the 4.3% expansion in the January-March quarter of 2012-13.

“As predicted widely, GDP growth in Q2 has come lower at 4.5%. Yet the Government says ‘All is well’. Q3 will not be more than 4.5% and in all likelihood will be worse,” Chidambaram said in a tweet posted by his family on his behalf.

Chidambaram tweet (1)

The former finance minister, who is lodged in jail in cases of corruption and money laundering, also urged the people of Jharkhand, where polling is underway, to vote against the BJP to record their rejection of its policies.

“People of Jharkhand must vote against the BJP and record their rejection of BJP’s policies and model of governance. They have the first opportunity to do so,” he tweeted.

Blow to AirAsia India, COO Sanjay Kumar quits

NEW DELHI: In a blow to AirAsia India, Sanjay Kumar — its chief operating officer (COO) — for just about a year has resigned from the position. Kumar is among the most experienced aviation professionals in India who had joined the Tata-AirAsia JV on December 3, 2018, after heading network and commercial at IndiGo for 12 years.
It is not confirm as of now AirAsia India’s Pvt Ltd (AAIPL) loss will be which airline’s gain with Kumar joining it.

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Low cost AAIPL has been mired in multiple court cases over grant of its license in India and has still not got permission to fly abroad despite completing five years in operation and having over 20 planes in its fleet. On the other hand, the second Tata JV airline with Singapore Airlines (SIA), Vistara, was the first airline to get the nod to fly overseas after this 5/20 rule was scrapped. AAIPL has seen significant management churn at top in past few years.

“While the professional culture at Tata Group and SIA is in sync, Tata Group and AirAsia are quite different,” say sources.

Kumar has over 25 years experience in Indian aviation industry across functions like business planning, strategy, network development, distribution and sales in IndiGo, Air Sahara, Royal Airlines and SpiceJet. He has a master’s degree in Economics from Meerut University and an MBA.

Japan won’t be part of RCEP without India

NEW DELHI: Japan is not considering signing the Regional Comprehensive Economic Partnership (RCEP) without India, the top Japanese negotiator said on Friday, ahead of a series of diplomatic exchanges in the coming weeks that include a visit to Delhi by Prime Minister Shinzo Abe.

India announced this month it was withdrawing from the China-backed regional trade pact, citing the RCEP deal‘s potential impact on the livelihoods of its most vulnerable citizens. China said that the 15 remaining countries decided to move forward first and India was welcome to join RCEP whenever it is ready.

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“We are not thinking about that at all yet,” deputy minister for economy, trade and industry Hideki Makihara, said in an interview. “All we are thinking of is negotiations including India.” Abe has sought to beef up ties with India across a range of fields to balance China’s regional dominance.

Japanese and Indian foreign and defense ministers hold their first joint meeting in a so-called ‘two plus two’ format this weekend. Both countries are also part of four-way security talks with Australia and the US called the Quad, a move that Beijing has complained could stoke a new Cold War.

“It is meaningful from the economic, political and potentially the national security point of view,” Makihara said of the inclusion of the world’s largest democracy in the pact. “Japan will continue to try to persuade India to join.”

Trade minister Hiroshi Kajiyama will accompany Abe on next month’s trip to India, Makihara said.

The other countries taking part in the RCEP talks are Australia, Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, New Zealand, Philippines, Singapore, South Korea, Thailand and Vietnam.

China has sought to accelerate the RCEP deal as it faces slowing growth from a trade war with the US. An agreement would further integrate Asia’s economies with China just as US President Donald Trump’s administration urges nations in the region to shun Chinese infrastructure loans and 5G telecommunications technology.

Meeting fiscal deficit target a Herculean task

NEW DELHI: The pressure to meet the fiscal deficit target for 2019-20 intensified further on Friday after latest data estimated nominal GDP growth at 6.1% in the September quarter, pegging the first half number at a shade over 7%.

This is much lower than the 12% nominal GDP growth (including inflation) budgeted by finance minister Nirmala Sitharaman, when she estimated the fiscal deficit for the current financial year at 3.3% of GDP.

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While most people look at the real GDP growth (net of inflation) number, for policymakers in North Block and central bank officers, the nominal growth numbers are crucial since that is the base to calculate the fiscal deficit.

“The lower growth in GDP will further strain government finances. It could result in the central government breaching the fiscal deficit target of 3.3% of GDP for 2019-20,” said Care Ratings chief economist Madan Sabnavis, adding that fiscal deficit for the year could be in the range of 4.1-4.3% of GDP.

fiscal def graphic (1)

Already, finances are under strain with separate data released by the Controller General of Accounts on Friday showing that at Rs 7.2 lakh crore, fiscal deficit was 102.4% of the Budget estimate (BE) at the end of October.

Although marginally better than the near 104% of BE reading at the end of October 2018, tax collections were a major area of concern as tax revenue rose just 1.2% during April-October 2019.

The economic slowdown, which is reflecting in lower imports, meant that customs duty collections fell over 15% in October 2019 to Rs 64,459 crore. It was already showing in the integrated GST collections, which have been declining for the past few months as companies were importing lower quantities of raw material and capital goods used for production in factories.

While the Rs 1.76-lakh-crore surplus transfer from the RBI and claims of higher than-budgeted disinvestment receipts may come to the government’s rescue, even government officers are sceptical of the Centre meeting the deficit target, without cutting down on expenditure.

Sitharaman has opted against commenting on numbers but has maintained that she will not wield the axe on major spending plans. The FM is currently reviewing the revised numbers shared by government departments in the run-up to the Budget, which is scheduled to be presented on February 1.

FMCG companies tweak sales mix in slow market

MUMBAI: To de-tangle growth from the grip of a slowdown, fast-moving consumer goods (FMCG) companies are redefining their product and marketing strategies, depending on their stage of evolution.

Hindustan Unilever (HUL), which is already well entrenched in both urban and rural India, has maintained its strategy of straddling the pyramid. Urban-centric company L’Oreal, on the other hand, is looking at a more premium play and has put the sachet strategy on the back-burner. There are some like Nestle India that have a greater emphasis on urban market (75% of its sales) than rural, and are looking to strengthen its portfolio mix with a clear focus on the core.

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In an exclusive interview with TOI, Nestle India CMD Suresh Narayanan said three factors will define the texture of consumption going forward. One is the mix of the portfolio which companies enjoy between super-premium, premium and mainstream products. “We will be expanding, but will be judiciously combining premiumisation with more mass-oriented products,” said Narayanan.

The second factor is the demand for a variety of products that consumers seek at different occasions.

“That’s what we played to with the aggressive innovation/renovation programme that we’ve had on 61 products in the last three years. That’s about three times what we were innovating before. The pace of innovation is going to play an important part,” said Narayanan.

Third is consumer-centricity of a brand. Those companies, said Narayanan, which are more consumer-centric and anticipate products that consumers might need are ultimately going to win the game with their agility and responsiveness.

“Today’s consumer, whether rural or urban, is seeking not just good price value but also trustworthy and sustainable quality. Consumers are looking at brands that are relevant to them. That’s a journey that companies need to traverse. So simply because your brand has been around for 50 years, in a particular format or price point, speaking a particular language, is not enough. It’s not consumers following the corporate journey, it’s corporates following the consumers,” said Narayanan.

Nestle India bucked the slowdown and declared a domestic revenue growth of 10.5%, which was better than its peers, in September quarter. Almost 60% of Nestle India’s incremental investment quarter-on-quarter has been on supporting new products. At this stage, new products form about 4% of Nestle’s domestic sales.

While it’s an investment stage and returns are low now, Narayanan said the company will invest in new innovations as long as it believes that it is getting a sustainable return. He, however, said the company cannot take its eyes off the ball with respect to its core.
A number of companies are said to be going back to focusing on the core. L’Oreal India, which had ventured into low-unit-price packs a few years ago, has withdrawn the sachet strategy. “Sachets are not part of our strategy,” L’Oreal India managing director Amit Jain told TOI recently, adding, “It’s very small. We conducted pilots some years back, but in shampoos and conditioners we are focused on bottles and to build a regime for haircare. We are focused on the premium play.”

Talking about the measures that can boost growth, especially in rural India, Narayanan said, “By now, we know it’s a demand-related issue. Albeit, I would say it’s less intensive as compared to some of the other sectors. If the monsoon impacts are positive, if some of the direct disbursement models are put into effect — some have also been talking about a reduction of income tax for the consuming class, along with GST changes — I think growth will start coming back.”

Narayanan, however, said it is not going to be a quick slope up. “It might be a bit steeper, but I still believe that there is hope,” he said. While adding a caveat that there are budgetary constraints which can neither be ignored nor forgotten, Narayanan said, “Equally, if you have to kick-start consumption, then we have to either put more money directly in the hands of people or indirectly through a tax effect.”

IL&FS takes InvIT route to sell nine road projects

MUMBAI: IL&FS Transportation Networks, the largest company in the IL&FS group, has taken steps to set up an infrastructure investment trust (InvIT) in a bid to offload the company’s road assets that are not seeing much demand.

An InvIT is like a mutual fund that allows a project’s promoter to monetise revenue-generating infrastructure assets by enabling investors or unit holders to invest in them without having to own them.

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On Friday, IL&FS Transportation Network informed the stock exchange that the board approved the incorporation of a new subsidiary of the company that will act as the sponsor of a proposed Sebi-regulated InvIt. The board had granted an in-principle approval to transfer the company’s shareholding in nine SPVs to the trust.
Last month, while giving an update of the progress in resolving IL&FS group debt, Uday Kotak — the government-appointed chairman of the company — said that demand for the road assets was weak and some projects had not received any bids.

Kotak had said that the board had decided to explore the option of creating an InvIT to which the combined debt of Rs 10,830 crore of nine road projects can be transferred.
IL&FS had received bids for only 10 of its 14 operating road assets. Of the 10 bids, the board had sent binding bids for five assets to the committee of creditors for approval. These bids were against a debt of Rs 9,500 crore for the five road projects.