MUMBAI: Banks receiving capital support from the government will have to think twice before putting money in non-core businesses. This is a condition that has been laid down by the finance ministry which, however, has not spelt out the activities that can be described as non-core. This was indicated in a letter by finance ministry to banks where the government is infusing capital. “Public sector banks are not to invest their core capital in any joint ventures, funds, subsidiaries which is not a core banking activity without prior approval from the Government of India,” said the ministry’s letter to banks. Banks, however, are confused that the letter does not specifically define non-core activities. The government will infuse about 20,000 crore capital in public sector banks, a move aimed at retaining their stake at 58% and also boosting bank’s core capital at 8%. Core capital includes equity and reserves. This is probably the first time that the finance ministry is imposing a pre-condition to capital infusion. (For details log on to : http://economictimes.indiatimes.com/news/economy/finance/want-money-shun-non-core-activities-says-finmin-to-banks/articleshow/12270369.cms)
DIRECT TAX COLLECTION SHORTFALL PUTS INDIA INC UNDER PRESSURE
NEW DELHI: The shortfall in direct tax collection target is now pinching the corporates. They have come under pressure from tax officials who are asking companies to pay more as last installment of advance tax so that gaps in targeted collection could be narrowed. Besides, various commissionerates of the income tax department want companies to pay more tax, over and above the amount they have shown in their returns. The last date to pay final installment of advance tax is March 15. The extra efforts by the department are on account of muted collection in direct taxes so far this fiscal. The direct tax mop-up until January has grown by a mere 9.28% to R3.46 lakh crore, well below 19% growth required to take the collection for the full fiscal to the budgeted level of R5.32 lakh crore for 2011-12. This means the finance ministry was to mobilise up to R1.86 lakh crore to achieve the target in the last two months of the fiscal. (For details log on to : http://www.financialexpress.com/news/direct-tax-collection-shortfall-puts-india-inc-under-pressure/924015/)
MOST ECONOMISTS EXPECT RBI GOVERNOR TO PAUSE, NOT CUT KEY RATES
MUMBAI: Reserve Bank of IndiaGovernor Duvvuri Subbarao, who has resisted calls for an interest rate cut for months, may persist with his policy on Thursday as he awaits government finances forecast for the next fiscal, and get a handle on inflation, which is rearing its head again. The governor, who looks beyond headline inflation numbers and is critical of the government’s finances, may not hurry to cut interest rates in response to slowing economic growth as his worst fear of inflation returning seems to be coming true, say economists. More than two-thirds of the 16 economists polled by ET are voting for a pause by the governor in his mid-quarter policy review to be announced at 11 am today. Less than a third are betting on a rate cut since any delay may damage economic prospects. IndusInd Bank is alone in forecasting a 50 basis points cut, while the rest are for 25. A basis point is 0.01 percentage point. (For details log on to : http://economictimes.indiatimes.com/news/economy/indicators/most-economists-expect-rbi-governor-duvvuri-subbarao-to-pause-not-cut-key-rates/articleshow/12270539.cms)
FMCG SECTOR WISH LIST: INTRODUCE GST, CUT MAT
MUMBAI: The R1.4-lakh-crore Indian FMCG sector has three primary expectations from the Budget — consistency in fiscal policy to enable companies to plan for the medium term, excise duty at current levels, and reining in of fiscal deficit by way of judicious spending. “We need to ensure that the Budget addresses immediate term growth concerns and at the same time contains inflation,” says Saugata Gupta, CEO, consumer products business at Marico, makers of Parachute and Saffola oil. “Both these factors contribute to the growth in FMCG consumption.” Indian FMCG companies had been under pressure for most part of last year due to commodity inflation owing to various global and local factors. “We believe the recent moderation in inflation and rising expenditure will require the government to increase direct and indirect sources of revenues,” says Sagarika Mukherjee, an analyst with SBI Capital Securities. “We expect some news on the progressive measures like introduction of the goods and services tax (GST). Excise duty rates are expected to increase by 10-15% for cigarettes and other FMCG products.” (For details log on to : http://www.financialexpress.com/news/fmcg-sector-wish-list-introduce-gst-cut-mat/924009/)
INFLATION JUMPS TO 6.95% IN FEBRUARY
NEW DELHI: India’s wholesale price inflation accelerated in February to 6.95% on dearer food and fuel items after easing to 6.55% in the previous month, stoking fresh concerns of a lingering price rise for policy makers just as they set out to announce the Budget for the next fiscal on Friday. Finance minister Pranab Mukherjee said inflation will likely fall in March to 6.5%, although price pressure in the economy continues. Analysts said rising inflation and a likely flare-up of fuel prices due to the ongoing tension between the West and Iranhave squeezed scope for the central bank to trim interest rates at its meeting on Thursday to prop up a faltering economy. Key bankers, including State Bank Of India chairman Pratip Chaudhuri, too, don’t expect any tweaking of monetary instruments in the apex bank’s mid-quarterly review on Thursday. The headline inflation had stood at 9.45% in February last year. (For details log on to : http://www.financialexpress.com/news/inflation-jumps-to-6.95-in-february/924008/)
BUDGET TO FIX MACROECONOMIC POLICY ROAD MAP FOR 12TH PLAN
NEW DELHI: The Union Budget for 2012-13, to be presented on Friday, is set to fix the macroeconomic policy map for not only the next financial year but also for the 12th Plan (2012-17). Pronab Sen, principal advisor to the Planning Commission, said solutions to the current problems would guide in formulating long-term strategies. “This year’s Budget will have to give a lead to the Plan because the problem is, the short term is actually dominating the long term today. We are not on a stable business cycle. In a sense, there is a role reversal between the Commission and the finance ministry.” The most important input from the Budget to the writers of the Plan document would be the manner in which the finance ministry decides to handle the twin problem of slowing growth and high inflation. “Once we know the finance ministry’s plan, we can build the 12th Plan from there. That would be the next four years’ plan,” said Sen. (For details log on to : http://www.business-standard.com/india/news/budget-to-fix-macroeconomic-policy-road-map-for-12th-plan/467798/)
NOW, FINANCE MINISTRY TOO IS ROPING IN GENNEXT
MUMBAI: The Finance Ministry wants to get ‘refreshing ideas’ from young scholars with brilliant academic background from reputed academic institutions. Towards this end, the Department of Financial Services (DFS), Ministry of Finance, has decided to take interns from reputed economic institutes/schools, national management institutes and national law schools. Young scholars, who usually tread the beaten path — joining investment banks or consulting firms or commercial banks — to do their internships, will now get a chance to dabble in policy-making. (For details log on to : http://www.thehindubusinessline.com/todays-paper/tp-money-banking/article2996060.ece)
RBI NOT IN FAVOUR OF RELAXING NORMS ON LOAN RESTRUCTURING, SAYS GOVERNMENT
NEW DELHI: The government said the Reserve Bank is not in favour of relaxing norms on loan restructuring for any specific sector, including textiles. The Textiles Ministry had submitted a proposal to the RBI in this regard as the industry has been facing difficult times owing to adverse global scenario and demand slowdown in the domestic market. In a written reply, Minister of State for Textiles Panabaaka Lakshmi informed Rajya Sabha that “restructuring is considered an event of default and the account is considered impaired as per international prudential and accounting norms.” (For details log on to : http://economictimes.indiatimes.com/news/news-by-industry/banking/finance/rbi-not-in-favour-of-relaxing-norms-on-loan-restructuring-says-government/articleshow/12264558.cms)
CERTIFICATES OF DEPOSIT RATES NEAR 3-YEAR HIGH
MUMBAI: Rates on short-term debt instruments inched closer to three-year high levels as liquidity tightened a day ahead of the advance tax payment deadline. According to market participants, South Indian Bank raised Rs 400 crore via certificates of deposit (CDs) for three months at 11.75 per cent. In 2008, the rates on three-month CDs had crossed 12 per cent. CDs are short-term debt instruments issued by banks to raise funds for a year. A structural liquidity deficit, coupled with seasonal demand for funds, have led to a surge in short-term debt rates. “There is panic from banks to meet huge deposit maturities lined up by cash rich entities for spike in term money rates,” said Moses Harding, head, economic & market research, IndusInd Bank. Banks continue to daily borrow Rs 1.2-1.3 lakh crore from the Reserve Bank of India (RBI), despite the reduction of 75 basis points in cash reserve ratio delivered by the central bank last week. “The measure would help to offset the impact of advance tax outflows rather than infuse additional liquidity,” said a senior treasury official of a public sector bank. (For details log on to : http://www.business-standard.com/india/news/certificatesdeposit-rates-near-3-year-high/467804/)
INVESTMENT BANKERS MAY RIDE HIRING WAVE
MUMBAI: Investment bankers have finally something to cheer about. At a time when most foreign banks and financial services firms are reducing their headcount, domestic financial institutions have chalked out aggressive expansion strategy and are expanding their investment banking teams with new recruits. HDFC, India’s second largest private sector lender, plans to hire 10 investment bankers over the next few months, to strengthen its presence in equity capital markets and advisory space. In 2011, the bank had roped in Rakesh Singh from Rothschild to lead its investment banking business. Singh, former managing director and co-head of financing advisory at Rothschild, was given the responsibility to build loan syndication, project financing, corporate finance and advisory, debt and equity capital market businesses. (For details log on to : http://www.business-standard.com/india/news/investment-bankers-may-ride-hiring-wave/467806/)
GO SLOW ON MOBILE WALLET
MUMBAI: Airtel Money’s latest advertisement is hard to miss. For the first time, the virtues of mobile banking are being conveyed to customers. Banks such as HDFC Bank, ICICI Bank, SBI, Bank of India, Corporation Bank and Standard Chartered are offering this service. However, not many know the manner of transacting or the kind of transactions that can be done using mobile phones and the charges involved. Airtel Money offers two types of accounts — express and power. The power account lets you spend and transfer money to other bank accounts, as well as to power accounts. You begin by registering yourself. You will have to visit the bank or service provider branch with an identity proof to fill the Know Your Customer (KYC) norms. ID proof, such as original letter of introduction from the bank, driver’s licence, employee ID card, PAN card, passport, voters ID, etc, will do. (For details log on to : http://www.business-standard.com/india/news/go-slowmobile-wallet/467755/)
DCB BANK RAISES RS 94 CR THROUGH QIP
MUMBAI: DCB Bank has raised about Rs 94 crore Tier I capital through a Qualified Institutional Placement issue. The bank’s board has also approved a preferential allotment of up to Rs 100 crore, said a press release issued on Wednesday. As a result of the QIP and the preferential issue, the promoters’ shareholding in DCB Bank would come to down to around 19.2 per cent, from 23.06 per cent as on end-December 2011. The promoters of DCB Bank are the Aga Khan Fund for Economic Development (AKFED) & Platinum Jubilee Investments Ltd. Following the preferential allotment, the Bank’s Tier I capital would increase by approximately by Rs 98.75 crore. As on end-December the bank’s Capital Adequacy Ratio was 13 per cent (of which Tier I was 11.15 per cent). This does not consider the impact of the QIP, the Preferential Allotment or the year-to-date profit after tax for the nine months ended on that date. (For details log on to : http://www.thehindubusinessline.com/todays-paper/tp-money-banking/article2996061.ece)
LIC PAYS RS 1,137.99 CRORE AS DIVIDEND TO GOVERNMENT FOR 2010-11
NEW DELHI: Country’s largest insurer Life Insurance Corporation of India (LIC) has paid Rs 1,137.99 cr to the Government of India as dividend for 2010-11. The dividend cheque was handed over by LIC current-in- charge Chairman D K Mehrotra to the Finance Minister Pranab Mukherjee yesterday, the state-owned insurer said in a statement today. LIC had declared a valuation surplus of Rs 22,752.71 crore for the financial year ending 2011. This surplus was arrived at, after the annual actuarial valuation was done and all liabilities were accounted, it said. The balance amount of Rs 21,614.72 crore would be ploughed back to the policyholders as bonus, it added. (For details log on to : http://economictimes.indiatimes.com/news/economy/finance/lic-pays-rs-1137-99-crore-as-dividend-to-government-for-2010-11/articleshow/12265991.cms)
SAHARA INDIA LIFE LAUNCHES SAHARA VATSALYA JEEVAN BIMA
MUMBAI: Private insurer Sahara India Life Insurance launched Sahara Vatsalya Jeevan Bima, a traditional plan aimed to meet the education requirements of the children of the policyholder. The new plan is a regular premium plan for parents aged between 20 to 50 years, for the benefit of the children within the age group of 0-12 years, the company said. Once the child (the nominee) becomes 19, the policyholder will receive an education benefit in four annual instalments — 20 per cent, 25 per cent, 25 per cent and 30 per cent — of the sum assured at the end of each of last four policy anniversaries, respectively. The policy will mature when the child attains the age of 22 years and at that time, all vested bonuses will be paid along with the last instalment. (For details log on to : http://economictimes.indiatimes.com/personal-finance/insurance/insurance-news/sahara-india-life-launches-sahara-vatsalya-jeevan-bima/articleshow/12264758.cms)
MANAPPURAM FINANCE PROMOTER SELLS 4% STAKE TO PE INVESTORS
KOCHI: Manappuram Finance Ltd (MFL) has offloaded four per cent of its share capital to MarqueePEinvestors in order to pay back the financial obligation of Manappuram Agro Farms (MAF). The shares were subscribed to by investors such as Baring India, Sequoia and Siguler Gulf Invest through bulk deals. Mr V.P. Nandakumar, Executive Chairman, MFL, said: “pursuant to my commitment to the board of directors to repay all outstanding public deposits of MAF, I have sold part of my shares representing approximately four per cent to the PE investors to raise Rs 130 crore for this purpose.” “I intend to repay all outstanding public deposits of MAF and honour all such obligation while ensuring that no inconvenience is caused to the depositors”, Mr Nandakumar said in a notice issued to the BSE. (For details log on to : http://www.thehindubusinessline.com/todays-paper/tp-markets/article2996051.ece)
SEBI REFUSAL TO ALLOW MCX-SX SET ASIDE
MUMBAI: The Bombay High Court today paved the way for the country’s third stock exchange, MCX-SX. In a 150-page judgment, it set aside the Securities Exchange Board of India’s (Sebi) order refusing permission to the exchange for equity trading. The high court asked Sebi to reconsider the application within a month. The court said Sebi’s findings regarding ‘persons acting in concert’ and the ‘buyback agreements’ the promoters had entered into with other shareholders were erroneous. Sebi had argued Financial Technologies and MCX were ‘persons acting in concert’ and together could not hold more than five per cent. The high court ruled, “The essential ingredients of the expression ‘persons acting in concert’ in the Takeover Regulations cannot be abrogated. Even the Supreme Court has held that the existence of a common objective or purpose is a necessary requirement of the expression which must be fulfilled by an agreement, formal or informal.” (For details log on to : http://www.business-standard.com/india/news/sebi-refusal-to-allow-mcx-sx-set-aside/467789/)
COURT BREATHER TO MUTUAL FUNDS ON TAX CLAIMS
MUMBAI: In a major relief to fund houses, the Bombay High Court today asked the Income Tax (I-T) department not to take any coercive action against the former till disposing of their pleas on the demand notices on income generated via pass-through certificates (PTCs). The bench of judges D Y Chandrachud and M S Sanklecha said fund houses’ bank account attachments should stand vacated. The court disposed of nine of 93 petitions by 16 fund houses on the matter. Sources say more petitions were filed during the day. Last November, the tax authorities had sent notices to individual fund houses to pay taxes worth a total of Rs 500 crore on income generated through PTCs. When their pleas were rejected, the fund houses moved court yesterday. Fund officials said they were not given enough time by the tax department and the process followed by the latter’s officials was not fair. (For details log on to : http://www.business-standard.com/india/news/court-breather-to-mfstax-claims/467753/)
DERIVATIVES OF FOUR GLOBAL INDICES TO START TRADING ON BSE FROM MONTH-END
MUMBAI: The Bombay Stock Exchange (BSE) is to launch rupee-denominated futures contracts on global indices, such as Brazil’s Ibovespa, Russia’s MICEX, Hong Kong’s Hang Seng and Hang Seng China Enterprises, and South Africa’s FTSE/JSE Top40, on its platform from March 30. BSE has already obtained approval from the Securities and Exchange Board of India (Sebi) for introducing futures contracts on these global indices, a spokesperson for BSE said in reply to an e-mail query. Futures and options contracts on the S&P 500 and futures on the Dow Jones Industrial Average are already available for trading on the National Stock Exchange. The BRICS (Brazil, Russia, India, Chinaand South Africa) Exchanges Alliance (five exchanges in the deal) will begin cross-listing benchmark equity index derivatives on each other’s trading platforms on March 30. Sensex futures will be available for trading on the BM&F Bovespa of Brazil, the MICEX-RTS of Russiaand Hong Kong Exchanges & Clearing as the initial representative of Chinafrom March 30. Both Sensex futures and options will be available for trading on South Africa’s JSE from the same day. (For details log on to : http://www.business-standard.com/india/news/derivativesfour-global-indices-to-start-tradingbsemonth-end/467759/)
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