New Delhi: Amid concerns of foreign investors over the tax treatment of investments, FIIs met senior finance ministry officials for the second time within seven days, to discuss the provisions of anti-tax avoidance rules, or GAAR. “The meeting ended on a positive note. We are examining the FIIs’ concerns. Our people are working on the rules,” a senior finance ministry official said. The meeting was also attended by representatives from the market regulator, Sebi.
Last week, foreign institutional investors (FIIs) met Finance Secretary R S Gujral over the issue. During the meeting, finance ministry officials assured them that the General Anti-Avoidance Rule (GAAR) provisions would be invoked only in case of “impermissible arrangements”.
“If they are in a permissible arrangement, clearly they are governed by the particular treaty and GAAR does not get invoked at all. If it is an impermissible arrangement, then GAAR gets invoked and the treaty does not help them,” Gujral had said.
In the Finance Bill 2012, Finance Minister Pranab Mukherjee has proposed to include GAAR provisions, which is aimed at targeting deals whose purpose is to avoid tax. Foreign investors fear that the proposed rule could apply to holders of Participatory Notes (P-Notes), the instrument through which foreign entities not registered in India could invest in the stock market, issued by FIIs.
Mukherjee has said that people investing through P-Notes would not be liable to tax in India, and the finance ministry has indicated that clarification on the GAAR provisions would come when the Finance Bill is passed by Parliament.
FIIs have assets under custody of more than Rs 10 lakh crore, or 17 per cent of the capitalisation of India’s equity markets. Further, these entities also invest in the Indian government and corporate debt.
RBI BUYS DOLLARS AFTER A YEAR TO ARREST RUPEE VOLATILITY
MUMBAI: The Reserve Bank of Indiapurchased dollars in February after more than a year to arrest volatility in the rupee against the dollar and prevent further appreciation. According to the latest monthly bulletin released by RBI, the central bank bought dollars worth $1.1 billion, for the first time since November 2010, to mop up excess dollar in the system. In November 2010, it had purchased dollars to arrest rupee’s appreciation due to huge subscription to the Coal India issue. RBI also sold dollars worth $1.43 billion in February. This is for the sixth consecutive month that RBI has intervened in the forex market. (For details log on to : http://economictimes.indiatimes.com/news/economy/finance/rbi-buys-dollars-after-a-year-to-arrest-rupee-volatility/articleshow/12604558.cms)
FORM GROUPS TO LEND OVER 150 CRORE: FINMIN TELLS BANKS
MUMBAI: The finance ministry has asked state-run banks to adopt a consortium lending approach for loans above 150 crore. The move is aimed at inducing stronger credit discipline among borrowers and preventing them from taking undue advantage of lenders. The consortium lending approach has a common agreement for a group of banks, in which a lead bank assesses borrowers’ funding requirements, sets common terms and conditions and disseminates information about borrower’s performance to other lenders. However, the government has exempted six large state-run banks – State Bank of India, Punjab National Bank, Canara Bank, Union Bank of India, Bank of India and Bank of Baroda – from mandatorily adopting the approach. (For details log on to : http://economictimes.indiatimes.com/news/economy/finance/form-groups-to-lend-over-150-crore-finmin-tells-banks/articleshow/12604513.cms)
PSU BANKS MAY HAVE TO CLOSE LOSS-MAKING ARMS
NEW DELHI: The government may ask public sector banks to either relocate or shut down loss-making branches as part of rationalization process. “This is a part of an ongoing dialogue (that includes) not only banks but insurance companies (too). If there are loss-making branches then we need to re-look at them why they are there. If that needs working out a business strategy , may be relocating them, may be scaling down of staff, all the needs (are) to be looked at,” financial services secretary D K Mittal said, when asked if the government has asked banks to submit report on loss-making branches. “Ultimately branches have been set up to earn. If they (loss-making branches) have been there for sometime say 12 months, then I think there is case to re-look at them,” he said on the sidelines of CII event here. There are about 87,000 branches of public sector banks across the country. Rising interest rate and slowdown in economy have impacted the repayment capacity of borrowers, especially small-and-medium enterprises , leading to rise in NPA of banks. (For details log on to : http://timesofindia.indiatimes.com/business/india-business/Public-Sector-Undertaking-banks-may-have-to-close-loss-making-arms/articleshow/12604717.cms)
E-FILING TAXPAYERS WON’T HAVE TO ACQUIRE A DIGITAL SIGNATURE
NEW DELHI: The income tax department is set to introduce a free-of-cost and easy-to-operate electronic signature facility to file income tax returns electronically. The facility will help taxpayers who do not have a digital signature. It will save them from the mandatory requirement of sending a hard copy of the return filed electronically through speed post to the department’s central processing centre in Bangalore. Acquiring an electronic signature will not involve any cost for the taxpayer, as it will be provided by the department. Currently, only those having digital signatures acquired through specified vendors by paying the required charges need not send the hard copy of the return to the department after filing electronically. A senior income tax department official told Business Standard the electronic signature mode was based on international best practices and would benefit taxpayers as well as the government. (For details log on to : http://www.business-standard.com/india/news/e-filing-taxpayers-wont-have-to-acquiredigital-signature/470757/)
RBI ALLOWS COOPERATIVE BANKS, RRBs TO TRANSFER FUNDS ONLINE
MUMBAI: To popularise electronic transfer of funds, the Reserve Bank of India (RBI) on Monday allowed regional rural banks (RRBs) and cooperative banks to participate in the centralised payment systems. With this, all the banks can now transfer funds electronically through real time gross settlement system (RTGS) and national electronic funds transfer (NEFT). At present, the centralised payment systems — RTGS and NEFT can be accessed only by members that included public and private sector banks. As an exception, RRBs have been given access to the NEFT system through their sponsor banks. “On a review, it has been decided to expand the sub- membership route to enable all licensed banks to participate in NEFT and RTGS systems,” RBI said in a notification. (For details log on to : http://www.business-standard.com/india/news/rbi-allowscooperative-banks-rrbs-to-transfer-funds-online/470766/)
AGENCY BUSINESS: STATE-RUN BANKS SEEK GOVERNMENT HELP
NEW DELHI: State-run banks have sought the finance ministry’s intervention to keep the lucrative agency business of central and state governments from going to private sector banks. Earlier this year, the Reserve Bank of India (RBI) had suggested all private-sector banks, apart from the Axis Bank, ICICI Bank and HDFC Bank that were already allowed in 2003, should be considered for handling central and state government business. The business is estimated at over 3,000 crore every year. “State-owned banks should get the agency business as they also bear much of the social sector burden,” said the chairman of one of the protesting state-run banks. Confirming the development, a finance ministry official told ET that the ministry would speak to the Controller of Central Government Accounts (CGA) before taking up the issue with the RBI. (For details log on to : http://economictimes.indiatimes.com/news/news-by-industry/banking/finance/banking/agency-business-state-run-banks-seek-government-help/articleshow/12604957.cms)
BANK OF INDIA TO RENAME ITS INDONESIAN ARM
MUMBAI: Public sector lender Bank of India today said it will rename its Indonesian arm, Bank of Swadesi, as Bank of India Indonesia. Bank of India holds 76 per cent stake in the Indonesian bank. The State-run lender said it has obtained the necessary approvals from the Ministries and Bank Indonesia. “Indonesia and India have close cultural and economic ties and with the core competency that Bank of India brings with it in areas of Agricultural and Industrial Finance capabilities, we are sure that Bank of India Indonesia will contribute in much larger measure to the growth of the Indonesian economy,” Bank of India Chairman and Managing Director Alok Misra said. (For details log on to : http://economictimes.indiatimes.com/news/news-by-industry/banking/finance/banking/bank-of-india-to-rename-its-indonesian-arm/articleshow/12595376.cms)
DHANLAXMI BANK SET TO CUT MORE JOBS
MUMBAI: More pain of job loss awaits employees of Dhanlaxmi Bank. As the Kerala-based private bank moves ahead with business consolidation and rationalisation, more heads are expected to roll. Already, the staff strength of the Thrissur-headquartered bank has come down to a little over 4,200 from 4,600 in November last year, as more than 300 employees have moved out. More exits were expected, chief executive officer P G Jayakumar said on Monday. “We do not need this much staff. Some rationalisation will happen,” he told reporters here. Of 4,200 employees, about 1,500 are already on the pay structure of the Indian Banks’ Association (IBA). The remaining 2,700 are on market-linked wages. From this lot, 700-800 have opted for the IBA pay structure. Jayakumar said the bank was conducting a branch-wise manpower requirement study. “The picture will become clear in five to 10 days,” he said, but declined to elaborate on how many more could lose jobs from such a procedure. (For details log on to : http://www.business-standard.com/india/news/dhanlaxmi-bank-set-to-cut-more-jobs/470764/)
QATARI DELEGATION MEETS PM, PRESSES FOR GRANT OF INDIAN LICENCE TO DOHA BANK
CHENNAI: A high-level Qatari delegation, led by Sheikh Hamad bin Khalifa Al Thani, Emir of Qatar, met Prime Minister Manmohan Singh and other government officials on Tuesday to press for the grant of a licence to Doha Bank to operate in India. The Indian government is learnt to have taken a sympathetic view on the demand, according to sources close to the development. West Asia’s key money lender and Qatar’s third largest commercial bank, Doha Bank, has been in the race for securing an Indian licence since 2005. Doha Bank had applied for an Indian banking licence way back in 2005, but policy constraints came in the way. In the wake of Indian government’s decision to grant more private bank licences in 2009, Doha Bank reapplied. (For details log on to : http://www.financialexpress.com/news/qatari-delegation-meets-pm-presses-for-grant-of-indian-licence-to-doha-bank/934634/)
BANK OF JAPAN LEAVES RATES UNCHANGED, HOLDS OFF EASING MEASURES
TOKYO: The Bank of Japan on Tuesday left its key interest rate unchanged and maintained its view that the world’s third-largest economy was picking up, but dashed hopes for fresh easing measures. The central bank, which made the announcement after a two-day policy board meeting, said the vote to keep rates unchanged at between zero and 0.1 percent was unanimous. Its decision not usher in more easing measures took a bite out of the Nikkei 225 index, which slipped into negative territory during afternoon trade, giving up a morning rally. The news also boosted the yen. In afternoon trade it was at 81.38 against the dollar, from 81.80 before the announcement, while it also rose to 106.78 to the euro, from 107.38 previously. (For details log on to : http://economictimes.indiatimes.com/news/international-business/bank-of-japan-leaves-rates-unchanged-holds-off-easing-measures/articleshow/12606903.cms)
A. K. ROY APPOINTED CMD OF GIC
Mr Ashok Kumar Roy has been appointed as Chairman and Managing Director of General Insurance Corporation of India(GIC Re) till July 31, 2015. Mr Roy was officiating as CMD of GIC Re from January 2, 2012. He was earlier General Manager, GIC. Mr Roy, an engineer from IIT Kharagpur, is also a Fellow of the Insurance Institute of India. Mr Roy joined the general insurance industry as a direct recruit officer in 1979. He was with the Oriental Insurance Co. Ltd for 29 years in various capacities, primarily as property underwriter, before moving to GIC in June 2008 as General Manager. (For details log on to : http://www.thehindubusinessline.com/todays-paper/tp-money-banking/article3297999.ece)
HDFC ERGO LAUNCHES HEALTH CLAIM SERVICES FOR CUSTOMERS
MUMBAI: Private Sector Company HDFC ERGO General Insurance today launched Health Claim Services (HCS), its in-house health claim servicing department, that will be a single window for customers for all health care related services. “With this internal mechanism we are planning to establish better control on the overall claim settlement process and improve the turn around time (TAT) with seamless, hassle free and transparent services in health claim settlement,” HDFC ERGO General Insurance Head – Strategic Planning Group Mukesh Kumar said in a release issued here. The main objective behind this initiative is to facilitate faster and transparent claim settlement process. HCS will not only provide personalised claim settlement services but will also act as a guidance centre for all health care related queries. (For details log on to : http://economictimes.indiatimes.com/personal-finance/insurance/insurance-news/hdfc-ergo-launches-health-claim-services-for-customers/articleshow/12595452.cms)
RETAIL FINANCE FIRM MAGMA FINCORP SETS UP OFFICE IN GURGAON
NEW DELHI: BSE listed retail finance firm Magma Fincorp on Monday announced it has set up its 56th office in north India. The firm’s zonal head Sanjiv Jha said Magma has an existing base of over 10,000 customers in the NCR region. “We expect Gurgaon to be a key growth driver for us across our product range; in the last financial year, we have disbursed Rs 397 crore in NCR and we plan to increase our business by 50% across product categories in the current fiscal,” Jha said in a statement. Magma operates through branches in Punjab, Rajasthan, Haryana and UP. Magma Fincorp, a non-banking finance company, is registered with the Reserve Bank of India (RBI). (For details log on to : http://economictimes.indiatimes.com/news/news-by-industry/banking/finance/retail-finance-firm-magma-fincorp-sets-up-office-in-gurgaon/articleshow/12596076.cms)
IFC PROVIDES RS 33 CRORE LOAN TO SNOWMAN LOGISTICS
BANGALORE: World Bank’s investment arm, IFC, has extended a $6.5 million (approximately Rs 33 crore) loan to food supply chain company Snowman Logistics, the institution said in a statement. In 2009, IFC had invested $5 million in the company to help expand storage capacity in the country. Snowman’s storage infrastructure is spread across 16 facilities in cities like Mumbai, Chennai, Bangalore, Hyderabad, Kochi, Kolkata, Ludhiana, and Vishakapatnam and it distributes to more than 4,400 outlets. “IFC’s investment in Snowman will help reduce wastage associated with Snowman’s clients, most of whom are in the agriculture and food sector,” said Anita M. George, IFC Director for Infrastructure in Asia. IFC, which put India’s agricultural logistics industry at $390 million, said an efficient farm-to-market cold food supply chain is essential for farmers to lower their distribution and inventory costs and access the markets within reasonable costs. (For details log on to : http://economictimes.indiatimes.com/news/news-by-industry/banking/finance/ifc-provides-rs-33-crore-loan-to-snowman-logistics/articleshow/12596198.cms)
INDIA INC RAISED $2.6 BILLION VIA ECBs IN FEBRUARY
MUMBAI: Indian companies filed for external commercial borrowings (ECBs) worth $2.6 billion (Rs 13,300 crore) in February for funding capital expenditure, acquisitions abroad and to repay old loans. Reliance Communications accounted for $925 million for redeeming its Foreign Currency Convertible Bonds (FCCBs). Vodafone entities (seven) raised $750 million to finance rupee expenditure, according to Reserve Bank of Indiadata. Senior bank officials said foreign borrowing by Indian companies remained high in 2011-12, to take advantage of the very low interest rates in the international market. Even after accounting for foreign currency risks, hedging costs and the spread over benchmark rates, the cost of these funds are low, compared to the high lending rates charged in India. (For details log on to : http://www.business-standard.com/india/news/india-inc-raised-26-bn-via-ecbs-in-february/470765/)
MUTUAL FUNDS GO SLOW ON DISCLOSING DEAL DETAILS ON WEBSITES
MUMBAI: Many mutual fund (MF) houses have not yet complied with new disclosure norms for debt and money market transactions in their schemes’ portfolios. To enhance transparency, the Securities and Exchange Board of India (Sebi) had asked fund houses to disclose all details of debt and money market securities transacted, including inter-scheme transfers, in the schemes’ portfolios on their websites. The regulator had also mandated fund houses to forward this information in a prescribed format to the Association of Mutual Funds in India(Amfi), which in turn is required to consolidate and disseminate these. Sebi had asked MF houses to make these disclosures settlement-wise, on a daily basis with a time lag of 30 days. Some fund houses have started disclosing this information on their websites, while many are yet to do so. This information could not be found even on the Amfi website . (For details log on to : http://www.business-standard.com/india/news/mfs-go-slowdisclosing-deal-detailswebsites-/470698/)
PFRDA IN TALKS WITH GOVERNMENT FOR MORE INCENTIVES TO FUND MANAGERS
NEW DELHI: In a move to popularise the National Pension Scheme (NPS) in the private sector, sector regulator PFRDA today said it is in talks with the government to increase incentives for fund managers. “We are struggling and fighting with the government to increase incentivisation amount for pension fund managers,” Pension Fund Regulatory and Development Authority (PFRDA) Chairman Yogesh Agarwal said at a CII meet here. Fund managers get only 0.0009 per cent of the funds managed by them as incentives. NPS is a government-run retirement scheme for individuals, including those in the unorganised sector. Introduced on January 1, 2004, it is mandatory for central government employees (except armed forces personnel) appointed on or after January 2004. The scheme was made available to all citizens on a voluntary basis from May 1, 2009. (For details log on to : http://economictimes.indiatimes.com/personal-finance/mutual-funds/mf-news/pfrda-in-talks-with-government-for-more-incentives-to-fund-managers/articleshow/12599119.cms)