Financial Snippets


"FINANCIAL SNIPPETS IS A CONCEPT EVOLVED BY MAA CAPITAL SOLUTIONS TO GIVE A FAIR IDEA TO OUR PATRONS AND GENERAL PUBLIC REGARDING THE LATEST CHANGES/EVENTS HAPPENING IN THE FINANCIAL MARKET. IT IS A SMALL STEP TO KEEP EVERYONE UPDATED ABOUT THE LATEST FINANCIAL EVENTS."


SNIPPETS- 19/08/2017

1. 9,000 WILFUL DEFAULTERS OWE Rs 92,000 CRORE TO PSBs’: Public Sector banks have reported 20% jump in the outstanding loans by wilful defaults. Nearly 9,000 wilful defaulters collectively owe an amount of Rs 92,000 crore to these banks as on 31/03/2017. There has been an increase of 10% in the number of loan defaulters over the year.

2. BAD LOAN RECOVERIES BY BANKS: It was a mixed bag for bad loan recoveries by public sector banks in the June quarter of the present financial year. While SBI has reported higher recovery, banks like Punjab National Bank, Canara Bank and Union Bank of India have shown a dip in recoveries. Whereas most of the Private sector banks have shown healthy growth in recoveries of bad loans. Axis Bank’s recoveries and up gradation has doubled in quarter one of the present financial year.

3. KARUR VAISYA BANK IS THE FIRST PRIVATE SECTOR BANK TO START AADHAAR ENROLMENT CENTRE: Following the directives given by UIDAI last MONTH, Karur Vaisya Bank has unveiled its first Aadhaar enrolment centre in one of its branch, thus becoming the first private sector bank to start a Aadhaar enrolment centre. The bank official said that once the required documents are submitted, the enrolment or any updation can be completed within 15 minutes.

4. UNUSUAL DEPOSITS WORTH Rs 1.7 LAKH CRORE DURING DEMONETIZATION: Unusual cash deposits totalling to Rs 1.6 to 1.7 lakh crore were made during the demonetization period says a research paper posted by RBI. This will be dealt firmly by the tax department.

5. DIGITAL WALLET COMPANIES WAIT FOR RBI NORMS: The Digital wallet industry is eagerly waiting for the latest release of fresh guidelines by RBI for the Prepaid Payment Instruments (PPIs). While the Central Bank is expected to open up fresh applications for PPI licences, the industry is also keeping an eye open for Know-Your-Customer (KYC) norms and cyber insurance for wallets. The top executives of the wallet industry have met the regulator and have voiced their suggestions and are now waiting for the final move from RBI.

6. RBI PLANS TO EXTEND CYBER AUDIT TO ALL THE BANKS: The Reserve Bank of India is planning to conduct cyber-audit of all the banks in the country instead of just a few bigger banks as it did in the past, a policy shift in the wake of an increase in cyber-attacks. RBI had created a cyber-cell under the department of banking supervision and used to conduct a separate IT audit for three banks, which was increased to 30 banks last year and this year RBI is covering all the banks for separate cyber-security and IT audit.

7. RBI ASKS BANKS TO ENABLE ACCOUNT NUMBER PORTABILIYTY AT THE EARLIEST: RBI Deputy Governor Mr. S S Mundra has asked banks to enable account number portability among banks at the earliest which will be a far reaching step towards enhancing competition and improving customer service. By enabling number portability a scenario will emerge wherein the unsatisfied customers would be able to walk out of the bank silently and thus banks will be compelled to provide better customer services.

SNIPPETS- 12/08/2017

1. AADHAAR MAY BECOME MANDATORY FOR FINANCIAL MARKET: Aadhaar number may soon become mandatory for buying shares and mutual funds. The government and SEBI are planning to link Aadhaar to financial market transactions which will help the government to plug taxes and curb black money. The government has already mandated that Aadhaar be linked to PAN, Bank Account and Mobile phone numbers.

2. GOVERNMENT TO INITIATE BANK MERGERS AFTER QUARTER-1 RESULTS: The Finance Ministry is expected to initiate the process of consolidation of public sector banks once the first quarter financial results of the current fiscal have been announced. There are factors like regional balance, geographical reach, financial burden and smooth human resource transition that are to be considered before taking the final decision. This is going to be a complex exercise for the Finance Ministry.

3. OVER 11.44 LAKH PAN CARDS DEACTIVATED: As per the rules it is “ One Person One PAN” which is the guiding principle for allotment of PAN. More than 11.44 lakh Permanent Account Numbers (PAN) have been deleted or de-activated in cases where multiple PANs were allotted to one person.

4. RBI INSTRUCTS BANKS TO ENSURE SAFETY OF CUSTOMERS’ LOCKERS: The Reserve Bank of India has asked banks to ensure customers’ lockers remain safe and there is no negligence that could render banks liable to claims by locker holders. The banks have been advised by RBI that it would be the responsibility of the banks to ensure safety of lockers and there is no negligence in the matter of safeguarding the lockers.

5. MERGER OF SMALL BANKS MAY HURT MSME SECTOR: Merger of smaller banks into big will hurt credit sourcing for MSMEs (Micro,Small & Medium Enterprises). The large banks will be reluctant to lend to these MSMEs as they are less keen on small sized loans. Their services will be less personalised and there will be more fees attached. This is as per the report from financial services firm- Resurgent India. MSME sector, which provides bulk of employment, accounts for 45% of India’s manufacturing, and nearly 8% of the country’s GDP.

6. RBI TELLS BANKS TO GO FOR PERIODIC VULNERABILITY TEST FOR CYBER SECURITY: Cyber security preparedness is a continuous process and the RBI has asked banks to periodically conduct vulnerability test. This is the result of the recent cyber-attacks and as India is gearing up for cashless economy, the cyber security plays an important role.

7. MONEY FLOW INTO FINANCIAL MARKETS INCREASED, POST DEMONETIZATION: Post demonetization, there has been visible channelizing of money towards financial assets like mutual funds, capital market and insurance. This was observed and stated by Mr. Viral Acharya, Deputy Governor of RBI. Mr. Acharya in his observations said that something has changed as black money transactions are not easy now and the money is flowing towards financial market, which is a positive sign.

8. AHEAD OF FESTIVE SEASON, ICICI BANK INTRODUCES INSTANT CREDIT CARD: Considering the demand due to the forthcoming festive season, ICICI Bank has introduced an instant credit card which can be availed online by its customers and start shopping on e-commerce sites even before the card is delivered to him/her.

SNIPPETS- 05/08/2017

1. SBI CUTS INTEREST RATE ON SAVINGS BANK DEPOSITS: State Bank of India has introduced a two-tier interest rate structure on savings bank deposits with effect from July 2017. A savings bank account with a balance of over Rs 1.00 crore will earn an interest of 4% per annum where as the ones with less than 1 crore balance will earn interest of 3.5% per annum. SBI in a press release has said that the decline in inflation rate and high real interest rates are the prime factors for the said revision.

2. RBI SLAPS 1 CRORE PENALTY ON UNION BANK OF INDIA FOR "KYC" NON COMPLIANCE: The Reserve Bank of India has imposed a penalty of Rs 1 crore on Union Bank of India for non-compliance with the directions on Know Your Customer (KYC) norms. RBI said it had received a complaint regarding huge cash withdrawals in in certain accounts and after verifying the documents regarding the complaint, the penalty has been imposed.

3. GOVERNMENT WANTS TO LINK AADHAAR WITH DRIVING LICENCE: The Centre is pushing for making Aadhaar mandatory for securing a driving licence and vehicle registrations. This will arrest the bogus licence menace and reduce instances of car thefts. It will create a national database and make inter-state transfer of vehicles easier and less time consuming.

4. NCLT CLEARS WAY FOR INSOLVENCY PROCEEDINGS AGAINST ESSAR STEEL: The Ahmedabad bench of National Company Law Tribunal (NCLT) has admitted an insolvency petition against Essar Steel India Ltd, paving the way for insolvency proceedings to commence against big ticket defaulters under the newly enacted Insolvency and Bankruptcy Code (IBC) 2016. State Bank of India and Standard Chartered Bank are the two banks who have filed independent petition to initiate insolvency proceedings against Essar Steel. Essar Steel has a total debt of Rs. 45,000 crore on its books.

5. AFTER ESSAR STEEL, BANKS NOW SET EYES ON VIDEOCON’S HUGE DEBT DEFAULT: A SBI- led consortium of lenders has ordered a forensic audit of Videocon Industries to find out whether the company defaulted because of adverse business conditions or financial mismanagement. KPMG, one of the Big Four Audit firms, will conduct the forensic audit. The move is preliminary to the start of debt restructuring after Videocon defaulted on loans worth Rs. 43,000 crores.

6. PSU BANKS NEED Rs. 1.9 LAKH CRORE CAPITAL BY MARCH 2019: As per a report by S&P Global Ratings, PSU banks will need at least Rs. 1.19 lakh crore additional capital by March 2019. Weak profitability and rising capital demands from Basel III implementation and substantial haircuts (settlements) on NPAs will continue to pressure these banks.

7. RBI RATE CUT IS UNLIKELY TO TRANSLATE INTO LOWER BORROWING COSTS FOR CUSTOMERS: The Reserve Bank of India’s decision to cut benchmark lending rate by 25 basis points is unlikely to translate into lower lending rates for the customers. SBI Chairperson Ms Arundhati Bhattacharya says that there is not much scope for lending rates to come down further, as the rates are low enough and the banks have already passed on the benefits to the customers.

8. RBI WIDENS BASEL-III COMPLIANT ASSET BASE OF BANKS: Ahead of the implementation of stringent capital requirements under the Basel-III regime from 2019, RBI has amended a number of previous regulations on the same, paving the way for banks to shore up their capital buffers and improve liquidity coverage ratio.

SNIPPETS- 29/07/2017

1. CORPORATE VENDORS UNDER I-T LENS: The Income Tax department has asked large corporate entities, including multinational firms to furnish details of employees not on the payrolls of the company who are being paid separately. This is to check whether they are filing tax returns after tax deductions at source (TDS). Many lawyers, chartered Accountants, Doctors, consultants and designers etc who are not on the payrolls of the company have not filed their I-T returns fearing they will have to disclose their full income.

2. BAD LOAN CRISIS—CRACKDOWN BY BANKS SENDS DEFAULTERSSCRAMBLING TO OFFER ONE TIME SETTLEMENT: The tough stance taken by the government and RBI to end the bad loan menace in the banking industry by instructing bankers to take extreme steps towards defaulters has caught many borrowers by surprise and they are scrambling to put together resolution plans to avoid harsher penalties including insolvency proceedings. This is a welcome change as seen by bankers as customers whose accounts are classified as Non-performing Assets are approaching bankers with proposals to resolve the issue in a time bound manner.

3. DIGITAL PAYMENTS—ONLY 7% INCREASE IN TRANSACTIONSTHROUGH DEBIT/CREDIT CARDS: Transactions through debit/credit cards rose merely by 7% post demonetization, as against a surge of over 23% in overall cashless transactions. Bankers say that there is lot of scope for further improvement in such transactions.

4. NO GST ON HOUSING SOCIETY RWA WITH Rs 5,000/- MONTHLY SUBSCRIPTION: Services provided by housing societies resident welfare associations ( RWA) will be required to pay GST on monthly subscription/contribution charged from its members if such payment is more than Rs.5,000 per member and the annual turnover of RWA is more than Rs. 20 lakh. However, the contribution of Rs. 5,000 is exclusive of any municipal taxes.

5. AADHAAR ENROLMENT FACILITY IN BANKS TO START SOON: The Unique Identification Authority of India ( UIDAI) has asked private as well as public sector banks to set Aadhaar enrolment facility in at least one out of 10 branches in the coming weeks. Suitable changes have been made recently in Aadhaar regulations to facilitate this. There are around 1,20,000 bank branches spread across the country and by this move 12,000 Aadhaar enrolment and updation centres will be set up.

6. 10 PUBLIC SECTOR BANKS HAVE SUBMITTED TURNAROUND PLANS: As many as 10 public sector banks have submitted their turnaround plans to the government. It is decided by the government that any future capital infusion to the banks shall be subject to achievement of select agreed upon milestones as per the turnaround plans submitted. Banks that will not be able to deliver on the agreed upon turnaround plan for a period of two years will be identified as banks eligible for alternative recourse.

7. AS COST OF EDUCATION RISES , UNPAID STUDENT LOAN SURGE: The cost of education in recent times has escalated but at the same time Non-performing assets (NPAs) within education loan book of the system as a whole has ballooned 21 % in the reporting year. Despite this increasing NPAs, banks continue to lend for higher education

SNIPPETS- 22/07/2017

1. FOR THE 12 BANKRUPTCY CASES BANKS WILL HAVE TO TAKE A HIT OF 18,000 CRORE: According to India Ratings Research report, Banks need to provide an additional Rs. 18,000 crore in Financial Year 2017-18 towards the 12 accounts identified by Reserve Bank of India for reference to the National Company law Tribunal ( NCLT) under the Insolvency & Bankruptcy code. Banks have been given 6 more months to finalise the resolution plans for other NPA accounts (around 500 more accounts). If no resolution plans emerge then banks will have to begin insolvency proceedings on these accounts as well, which in turn would mean huge provisions in Financial year 2018-19, which will impact badly on the profitability of banks.

2. BANKS TO FACE Rs. 2 LAKH CRORE HIT FROM TOP 50 STRESSED ACCOUNTS: As per CRISIL Ratings Agency estimation Banks may have to write off 60% of the value of bad loans from their 50 large stressed asset accounts or take a hit of Rs. 2.4 lakh crore. The 50 top stressed companies, which account for Rs. 4 lakh crore in stressed loans and account for nearly half of the total NPAs in the banking industry.

3. RBI NOT REVIEWING 90 DAY BAD LOANS CLASSIFICATION NORMS: The Finance Ministry has said the Reserve Bank of India is not examining any proposal to extend the 90-day period for classification of Non-Performing Assets. The prudential norms are one of the building blocks for financial soundness of Indian Banks and any deviation would render the banking system weaker. Further, any delay in recognition of deterioration in asset quality removes the pressure on banks to deal promptly with the problem.

4. RBI ALLOWS NBFCs TO OFFER NEW PENSION SCHEME: The Reserve Bank of India has allowed Non-Banking Finance Companies (NBFCs) to sell and market the new pension scheme (NPS). NBFCs with an asset size of Rs. 500 crore and above that have made a net profit in the preceding financial year will be permitted to sell NPS to their clients after registration with pension regulator.

5. RBI TO SET UP PUBLIC CREDIT REGISTRY TO IMPROVE CREDIT CULTURE: The Reserve Bank of India is planning to set up a high level Public Credit Registry (PCR) to help control loan defaults, improve credit culture and promote financial inclusion. RBI said such a registry is the need of the hour which will help the efficiency of financial market, improve ease of doing business and help control delinquencies.

6. IDFC-SHRIRAM GROUP AGREE TO MERGE: IDFC Ltd, a domestic infrastructure lender and Primal group financial services major Shriram Group have agreed to merge and thus create the largest retail- focussed bank in the country. A formal merger will take place in 12 months if all goes well as per the proposed plan. IDFC Ltd will be the holding company of the merged entity.

7. GST IMPACT—DISMANTLING OF CHECK POSTS SAVE 24-36 HOURS OF TRUCKING TIME: The Goods and Service Tax (GST) is saving fleet owners between 24 to 36 trucking hours after dismantling of check posts of VAT, Octroi and other local taxes. Besides this it also ended huge amount of corruption which was taking place at each of the check posts.

SNIPPETS- 15/07/2017

1. NEW ACCOUNTING STANDARDS MAY HIT BANKS’ LENDING TO INFRA/REALTY FIRMS: The adoption of new Indian Accounting Standards (IndAS) might compel banks to cut down on the quantum of loans they normally sanction to firms involved in Real estate and Infra Sectors. IndAS will result in a change in Debt-to Equity ratios of such firms as capital structures and financial instruments get reclassified. This will in turn increase the debts of the companies thus compelling banks’ to reassess the way they lend to these companies.

2. SBI URGES THE GOVERNMENT TO EASE PROVISIONING NORMS: State Bank of India has written to the finance Ministry raising concerns over stringent provisioning norms for companies under the Bankruptcy code, which will eat into its profit margins. Banks are reluctant to meet these norms and hence SBI has sought the ministry’s intervention on the matter.

3. AXIS BANK LAUNCHES “SUPER BIKE LOANS” : As the Higher Engine Displacement- High End models in bikes is catching the fancy of Indian consumer, AXIS Bank has introduced a special loan product – “ Super Bike Loan” which offers funding of 95% of the bike cost. This includes the cost of the bike and the accessories also. The rate of interest will be between 10 to 11% per annum. These bikes come with a price tag of Rs. 5 to Rs 50 Lakh. The segment had witnessed a sale of over 3,000 units last year.

4. SBI HAS STARTED TO OFFER GST-READY SOLUTIONS TO ITS CUSTOMERS: State Bank of India has announced its Goods & Services Tax ready solutions, including the introduction of online payment through internet banking and debit cards. SBI customers can deposit GST up to Rs.10,000/- in cash, cheque or draft from any of the SBI branches across the country.

5. GOOGLE COMPLETES UPI TESTING, AWAITS RBI NOD TO LAUNCH SERVICE: Technology giant Google has completed the testing of its Unified Payments Interface (UPI) payment service and is awaiting RBI’s approval. The National Payments Corporation of India ( NPCI), the umbrella organization for all retail payments system in India also said that Facebook and Whatsapp too were in discussion with it regarding rolling out their own UPI payment services. Very soon these three big technology giants will start their UPI operations.

6. DIRECT SELLING AGENTS UNDER WATCH IN HOME LOAN TRANSFER CASES: To check possible instances of mis-selling, the housing finance regulator- NHB is examining data on home loan transfers from one bank to the other and may issue guidelines for direct selling agents ( DSAs) in the interest of the borrowers. NHB wants to check whether the balance transfers are genuine transactions or the agents are playing a game on it. The ultimate goal of NHB is to bring in a very well trained set of Agents in the interest of the borrowers.

7. CURRENCY BAN IS NOT A GROUND FOR BANKING OMBURDSMAN TO HANDLE COMPLAINTS: The Reserve Bank of India has clarified that customer complaints regarding the problems like cash withdrawal and exchange of notes faced during demonetization period cannot be entertained under the Banking Ombudsman scheme. Banking Ombudsman Scheme 2006 specifies 27 grounds of complaints under which complaints can be lodged and complaints related to demonetization is not a ground of complaint specified under the scheme.

SNIPPETS- 08/07/2017

1. CUSTOMERS SHOULD REPORT FRAUDULANT TRANSACTIONS WITHIN 3 DAYS TO AVOID LOSSES: The Reserve Bank of India had earlier capped the customer liability at Rs.25,000 if they reported the unauthorised transactions within 7 working days. Now further modifying this clause, RBI said that customers can’t be made liable at all if they notify the unauthorised transactions within 3 working days. These rules will be applicable for third party breach, where deficiency lies neither with the bank nor with the customer but lies elsewhere in the system.

2. RBI MAKES MOBILE PHONE MANDATORY FOR DOING ELECTRONIS BANKING TRANSACTIONS: The Reserve Bank of India has said that owning a mobile phone is mandatory for customers wishing to do electronic banking transactions and has instructed banks to make SMS alerts mandatory in such cases. It has instructed banks not to offer electronic banking facility to customers who do not provide mobile numbers to the bank.

3. OVER 90% INDIAN CUSTOMERS STILL PREFER BRANCH BANKING OVER ONLINE BANKING: While the government has been pushing for cashless transactions and asking the public to go online when it comes to banking, a new study has revealed that 94% of retail banking customers have visited the bank branches at least once in the past 12 months. Most banking relations still begin and continue at the branch. However, there is great potential for banks to move more into digital space.

4. IT IS NOT MANDATORY TO LINK YOUR BANK ACCOUNT WITH AADHAAR CARD: There is no notification from RBI to link a bank account with Aadhaar number. By collecting Aadhaar details from their customers the banks are trying to pre-empt the possibility of it becoming compulsory in future. Another reason why banks are linking Aadhaar with the bank accounts is to promote Aadhaar enabled transactions without the use of debit or credit cards.

5. CREDIT CARD BILL PAYMENT EXEMPT FROM CASH DEALING LIMIT: The Finance Act 2017 has banned cash transaction of Rs. 2 lakh or above with effect from April 1, 2017. However restrictions on cash dealings of Rs. 2 lakh or more will not apply to credit card bill payments, business correspondents appointed by banks and issuers of prepaid instruments. This has been clarified by the revenue department.

6. HOW “BHIM APP” IS TRYING TO CATCH UP WITH OTHER MOBILE WALLETS: The Bharat Interface for Money ( BHIM) has seen a great many downloads of around 19.16 million since its launch but only 5.1 million users are able to link their bank accounts with the App. In contrast other payment apps like Oxigen wallet currently has 30 million active users and Mobikwik has 55 million active users. Recently BHIM has come up with additional features like Aadhaar Pay, Referral bonus and cash back offers to make it more popular.

7. BANKING STAFF THREATENS STRIKE ON AUGUST 22 OVER MERGERS AND NPA ISSUES: Employees of PSU banks are going on one day strike on August 22nd against the government proposal to merge state-owned banks. Besides, they want the government and RBI to declare wilful default as a criminal offence and desist from writing off the corporate Non-Performing Assets (NPAs) or bad loans. They also have urged the government to look into the GST rates on bank service charges because of which the service charges have increased, which in turn has burdened the customers.

SNIPPETS- 01/07/2017

1. RBI STARTS THE PROCESS OF PRINTING Rs. 200 CURRENCY NOTES: Reserve Bank of India has started the process of printing new Rs.200 currency notes. This appears to be the last exercise under the re-monetization steps taken by the government and this step is taken to help ease consumer transactions. For day-to-day transaction purposes, the introduction of Rs.200 notes will add to the comfort of the public at large.

2. RBI SAYS- BANKS NOT RESPONSIBLE FOR THEFT FROM BANK LOCKERS: Banks are not liable to compensate its customers in case of theft or burglary in safe deposit lockers. This is revealed in an RTI response by RBI and 19 PSU banks. Some banks, in their locker hiring agreements, have made it clear that any item stored in the locker is at the customer’s own risk and he/she may insure the same in his/her own interest.

3. BANKS FACE 60% “HAIRCUT” ON TOP 12 BAD LOANS: Dragging defaulters to the National Company Law Tribunal ( NCLT) and initiating insolvency proceedings will take heavy toll on bank finances. According to CRISIL, banks will have to sacrifice nearly 60% of the value of the loans extended to 12 indebted companies which the banks have referred to the NCLT at the instance of RBI.

4. RBI PROVISIONING “DIKTAT” SHOCKS THE BANKS: The Reserve Bank of India shocked the banks this week by demanding a steep hike in provisioning requirements for loans being referred to the bankruptcy courts, a move likely to take a Rs. 50,000 crore toll on their earnings this fiscal. RBI has instructed banks to set aside 50% of the loan amount as likely losses for all cases referred to the insolvency process. RBI also said that provisioning should be 100% in those cases that do not get resolved in the initial mandatory period for restructuring and instead are forced into liquidation. But banks have been given time of three quarters to spread the provisioning requirements from June 2017 till March 2018.

5. RBI ASKS BANKS TO RESOLVE 55 DEFAULT CASES IN 6 MONTHS OR FACE IBC: The Reserve Bank of India has asked banks to resolve 55 high value cases of bad loans within 6 months or face the prospect of being directed to go in for the new insolvency resolution mechanism as a part of the strategy to tackle the bad loans scenario on a war footing basis.

6. FINANCIAL YEAR LIKELY TO BE CHANGED FROM 2018: The financial year in India could commence from January instead of April from the year 2018. The government appears set to make the historic transition to end the 150 year old tradition. Accordingly, the next budget could be presented by the centre in November this year.

7. AADHAAR-PAN LINKING MANDATORY FROM JULY 1st: Finance Ministry has made it mandatory to link Aadhaar with PAN Number. Individuals having PAN No. will have to link it to their existing Aadhaar Number from July 1st onwards. Every person who has been allotted PAN shall intimate his Aadhaar number to the tax department.

SNIPPETS- 24/06/2017

1. PASS ON THE GST BENEFITS TO CONSUMERS OR GET LICENSE SCRAPPED: Any business entity that fails to pass on the benefit it derives from lower taxes under GST regime to its consumers, faces penalties and cancellation of license under the new antiprofiteering rules. The new National Antiprofiteering Authority would be empowered to force reduction in the prices to the extent of lowering of taxes, and impose penalty or even cancel the registration under the Central GST Act in case the benefit is not passed on to the consumers.

2. SUPREME COURT RULING ON AADHAAR-PAN LINKING AND CBDT CLARIFICATION: Further to the ruling by Supreme Court ruling on the constitutional validity of Aadhaar-PAN linking provision, the Central Board of Direct Taxes (CBDT) has clarified that every tax payer has to quote his Aadhaar number /Aadhaar enrolment ID while applying for obtaining PAN card number and also while filing his/her tax returns from July 1st 2017.

3. RBI INSTRUCTS BANK TO PROVIDE ADEQUATE TRANSACTION DETAILS IN PASSBOOKS: The Reserve Bank of India has instructed all banks to provide “adequate details” in the passbooks and account statements so that the customers can cross check the entries easily. RBI has advised banks to avoid inscrutable entries in the passbooks /statement of accounts and ensure that brief and intelligible particulars are entered with a view to avoid inconvenience to the customers.

4. SEBI RELAXES NORMS FOR LENDERS BUYING STAKE IN DISTRESSED COMPANIES: Securities & Exchange Board of India (SEBI) has relaxed the norms for lenders to purchase stakes in distressed companies, exempting them from making open offers for shareholders. The relaxation would be subject to certain conditions, including shareholders’ approval of the stake acquisition by way of special resolution. SEBI said this is aimed at facilitating “turnaround” of listed companies which are in distress which will benefit the shareholders and the lenders.

5. NO TIMELINE ON IDENTIFYING ADDITIONAL LOAN DEFAULETERS: The RBI Deputy Governor has said that there is no specific timeline set for banks to identify additional defaulters on which bankers would need to start bankruptcy proceedings. Earlier this week the RBI had identified 12 largest loan defaulters to pursue bankruptcy proceedings against them.

6. GOVERNMENT IN TALKS WITH RBI TO DEFER BASEL-III NORMS FOR BANKS: The RBI has laid down norms for implementation of international capital norms or “BASEL-III” norms for Indian Banks by March 2019. According to these norms the banks have to maintain a minimum common equity ratio of 8.5% and total capital ratio of 11.5% by March 2019. However banks are struggling to maintain these ratios as they are saddled with huge bad loans scenario. Considering the current bad loan scenario, the government is in discussion with RBI to explore the possibility to defer the full implementation of “BASEL-III” norms.

7. RECORD INCOME TAX COLLECTIONS THIS YEAR: Net Income Tax collection till June 15th 2017 grew at a healthy 26.2% to Rs. 1,01,024 crore from across the country. Last year up to June 2016 the tax collection was Rs. 80,075 crore.

SNIPPETS- 17/06/2017

1. FARM LOAN WAIVERS DISRUPT CREDIT DISCIPLINE: Farm loan waivers are the populist actions and lead to disruption of credit discipline among borrowers. Frequent farm loan waiver schemes will have a negative impact as farmers expect future loan waivers from time to time and thus delay or stop repaying the loans. Frequent occurrence of such populist actions (loan waivers) may lead to impaired credit repayments and thus reduced credit availability to farmers.

2. RBI TO DIRECT BANKS TO START BANKRUPTCY PROCEEDINGS AGAINST 12 BIG DEFAULTERS: The Reserve Bank of India has identified 12 of the largest loan defaulters and has instructed the bankers to initiate bankruptcy proceedings against them. The move comes about a month after the government gave RBI greater power to deal with bad loans, including banks to initiate an insolvency resolution process in case of a default. These 12 accounts constituted about 25% of the overall gross Non-Performing Assets (NPAs), and have been identified, as the committee focussed on those accounts owing more than Rs.5,000 crores, out of which more than 60 % of the loan had been classified as NPA.

3. ONLINE BANKING TO KILL PHYSICAL BANKING IN 5-6 YEARS: As per NITI Aayog CEO Mr Amitabh Kant, low cost internet based banking transactions and business efficiency due to technology advancements are expected to kill the physical banking trend in 5-6 years. In 5-6 years it will be very difficult for physical banks to survive because the cost of physical banks will be enormous. This cost will be very huge to bear for the banks compared to the cost of an online fintech company and their ability to do data analysis and providing credit.

4. NPCI TO LAUNCH RUPAY CREDIT CARD BY JULY: The National Payments Corporation of India (NPCI) has said it will launch a RuPay credit card by July this year. As many as 56 different banks have shareholding in NPCI despite it being a non-listed entity with no dividend declarations. Presently there are 241 million RuPay debit cards in circulation in India comprising 35% of the card base in India.

5. RBI EXAMINING RELAXING BAD LOAN CLASSIFICATION LIMIT OF BEYOND 90 DAYS FOR SMEs: Currently an account turns into a Non-Performing Asset (NPA) or bad loan if it is not serviced for 90 days. In case of Small Businesses and SMEs, their receivables usually come late (absence of vibrant factoring or trade receivable market) and once this cycle is delayed, they miss the 90 day period of repayment, they fall into NPA category and coming out of NPA category is very difficult for these SMEs. Some people have made a true representation in this matter to the Ministry of Finance and hence RBI is looking into it, to extend the classification norm of 90 days period for Non-Performing Assets to help Small and Medium Enterprises ( SMEs).

6. BHARAT FINANCIAL TO ROLL OUT 2 LAKH “KIRANA POINTS” IN 16 STATES: Bharat Financial Inclusion (Earlier known as SKS Microfinance) is planning to launch 2 lakh “Kirana Points” across its network in 16 states in partnership with leading banks. With introduction of Kirana Points, the company’s borrowers can walk into the nearest kirana point store and make basic financial transactions like repaying loan, deposits and withdrawals from savings account and make bill payments. For this the company will appoint agents to set up kirana points.

7. PE FIRMS, NBFCs FIND INVESTMENT OPPORTUNITY IN AFFORDABLE HOUSING: Private Equity and Non-Banking Financial Companies (NBFCs) are looking at affordable housing projects. A few Institutions have already invested money in affordable housing projects, bringing in the much needed liquidity. This is the result of the government’s thrust on the segment and recently accorded infrastructure status.

SNIPPETS- 10/06/2017

1. RBI DIRECTS BANK BRANCHES TO COMPLY WITH PPO ORDER: The Reserve Bank of India has directed all the bank branches to record Pension Payment Order number (PPO) in the passbooks of pensioners to avoid any hassle in case the PPO is lost. This is affected to nullify the difficulties reported by pensioners or their family pensioners to get duplicate PPO.

2. SBI SNAPS “LINE OF CREDIT” TO STRESSED TELECOM COMPANIES: State Bank of India has cancelled existing but unused credit lines to some financially weak telecom companies, following the banking regulator’s direction to make immediate provisions against the credit given to telecom sector including their standard assets. As per the line of credit, a borrower can draw from the credit as per his requirements. By scrapping the facility, bank will be able to bring down its requirement of capital that otherwise needs to be set aside as provisions. SBI is also waiving the commitment charges.

3. BANKS NEED Rs.95,000 CRORE ADDITIONAL CAPITAL OVER NEXT TWO YEARS: As per Moody’s Investors Service report, new stressed assets of Indian Banks will increase through 2019 and capitalisation will remain a key credit weakness for state owned banks. The asset quality outlook for banking sector will remain weak as Gross Non Performing Assets (NPAs) or bad loans will increase to around Rs. 8.5 lakh crores by the end of financial year 2017-18. Since Public Sector Banks (PSBs) have limited ability to raise external capital, infusion by the government remains the only viable source for shoring up capital base. As per the plan, the PSBs need to raise Rs.1.10 lakh crores from markets to meet Basel III capital adequacy norms.

4. IDBI BANK TO SET UP SEPARATE DEPARTMENT TO MANAGE BAD LOANS: IDBI Bank has created a special department for managing bad loans and monitoring credit after taking a serious hit as RBI has put the bank under PCA (Prompt Corrective Action) and ICRA has downgraded the bank’s credit rating. This department will have experienced officials who will give focussed attention to each case. Besides this, the bank also aims to raise around Rs. 5,000 crores by selling its non-core assets in the current fiscal.

5. EQUITY MUTUAL FUNDS INVESTMENTS ACHIEVE 2 YEAR HIGH: Equity Mutual Funds saw an inflow of Rs.10,790 crore in May 2017, making it the highest in nearly two years. This is the 14 th straight month of inflows into equity schemes. The strong inflows have pushed the asset base of equity mutual funds by 2.6 % in May 2017 from the preceding month.

6. BANK NPAs ARE ROADBLOCKS TO GROWTH: As per the trade body ASSOCHEM, Non- Performing Assets of Indian Banking sector are one of the biggest roadblocks for the growth of the economy. It has urged the RBI to make NPA norms more flexible and take pragmatic approach while resolving the complex issue of NPAs of banks so that the banks can be nursed back to health.

7. SBI OFFERS FREE CREDIT CARDS TO THOSE WITH NO CREDIT HISTORY: If you don’t have a credit history, banks are generally reluctant to offer you a credit card. But to help such customers and increase the card penetration in India, SBI has come out with a credit card “ UNNATI” which will be available to its customers even if they do not have a credit history provided they have a minimum deposit of Rs 25,000 with the bank. Any SBI customer with or without a credit history can apply for the card. The card will be available free of cost for the first four years.

SNIPPETS- 03/06/2017

1. SBI WANTS DEPARTMENT OF TELECOM TO PROTECT BANKING SECTOR’S Rs.4 LAKH CRORE EXPOSURE TO TELECOM SECTOR: Indian Banking sector has a huge exposure of nearly Rs.4 lakh Crore to the telecom sector. This could come under stress due to declining telecom revenues. Hence State Bank of India has written to the Department of Telecom to work out a bailout plan for the telecom operators, including deferred payment for spectrum and rationalising spectrum fees.

2. SOON YOU MAY SWITCH YOUR BANK ACCOUNT AND RETAIN YOUR ACCOUNT NUMBER: Every time you change your Bank, you will change your bank account number too as you will be allotted with a new number in the bank where you open an account. But very soon, like your mobile number portability you will be able to retain your old bank account number even if you change your bank. With the technological advancements in the payment system, account number portability will be a reality in near future.

3. SENSEX WILL TOUCH 32,200 MARK BY MARCH 2018: As per Citigroup Global Markets, Sensex will touch 32,200 by March 2018. The firm said that implementation of Goods and Service Tax (GST), strong flows from domestic mutual funds and foreign investors will push the share market index to 32,200 by March 2018. The firm believes that in this, the foreign investors are likely to impact the market’s direction considering their contribution of over 20%.

4. BANKS CAN CHECK 3 YEARS RECORD OF BORROWERS: Banks are now armed with more information than before on card holders. They can now tell which card holder is likely to default, and which defaulter’s case is worth to pursue and recover funds. A next generation algorithm enables banks to check customer transactions for the past three years across multiple banks and financial institutions and figure out which customer is undergoing a downturn as far as finances are concerned and who is improving.

5. BANKS WRITE OFF Rs.2.25 lakh CRORE IN FIVE YEARS: All scheduled commercial banks ( SCBs) wrote off Rs 2,25,180 crore of bad loans cumulatively in the last five years period till March 2016. SCBs represent all public and private sector banks, foreign banks, regional rural banks and some co-operative banks. These represent over 95% of total bank credit given.

6. RBI MAY HAVE A DEPUTY GOVERNOR FROM PRIVATE SECTOR FOR THE FIRST TIME: The government for the first time has advertised to choose a deputy governor for the country’s central bank. The government intends to include directors and consultants with significant experience in banking and financial markets. RBI has sought applications from candidates with over 15 years of experience in banking and financial market operations and they must also have been whole time directors or board members. This means potentially RBI may appoint a Deputy Governor from the private sector for the first time.

7. BANKS RECOVERED ONLY Rs.47,000 CRORE OF LOANS IN FY-2016-17: Gross NPAs of 37 listed banks were at a level of Rs 7.1 lakh crore as on March 2017. An analysis of the top banks of the country has revealed that these banks have managed to recover only Rs 47,240 crore in the financial year 2016-17 out of which Rs.16,000 crore was recovered in the last quarter of FY 2016-17. Among the PSU banks only Punjab National Bank and Canara Bank managed to deliver by reaching their targets. PNB recovered Rs.10,677 crore and Canara Bank recovered Rs.10,017 crore.

SNIPPETS- 27/05/2017

1. HDFC LTD, AMONG THE WORLD’S TOP 10 CONSUMER FINANCIAL SERVICES FIRM: Mortgage lender HDFC Ltd has been ranked 7th among the world’s top ten biggest and powerful companies in consumer financial services sector on Forbes list. American Express tops the list. In the regional banks category State Bank of India is ranked 20th.

2. RBI ALLOWS CO-OPERATIVE BANKS TO ISSUE MOBILE WALLETS: In a notification issued this week, the Reserve Bank of India has allowed co-operative banks to issue prepaid payment instruments like mobile wallets. Besides this, co-operative banks can also install ATMs and issue debit cards.

3. NOW BANKS FEAR LOAN DEFAULT BY COMMODITY COMPANIES: After infrastructure firms, now it may be commodity firms that may default on repayments of loans. Bankers estimate that at least a dozen companies in commodity sector that have got their debt restructured will fail to service their loans after being hit by sharp price movements.

4. IDBI BANK UNVEILS TURNAROUND PLAN: IDBI Bank has formulated a turnaround plan that includes raising of additional capital and selling non-core assets. The plan also includes curbing its rising corporate loan book and cutting costs. The bank is looking at all the avenues to improve its capital position and bring the bank on the recovery track.

5. RESERVE BANK OF INDIA CREATES POST OF “CFO”: The Reserve Bank of India is creating a post of a Chief Financial Officer ( CFO) and has sought applications for the said post. The CFO, who will be of the rank of Executive Director, will be responsible for accurate and timely presentation and reporting of financial information of the Central Bank and establish accounting policies and procedures and ensure compliance with regulations.

6. SMALL BUSINESSES SUFFER AS BRUISED BANKS RELUCTANT TO GRANT LOANS: Banks’ worsening asset quality has made them reluctant to grant new loans, especially to smaller businesses that are perceived as riskier. With the mountain of bad loans in Indian Banking system, the banks are reluctant to lend and this has badly affected the small and medium sized enterprises ( SMEs’). India has 45 million such small enterprises, accounting for 40% of gross domestic product. Smaller businesses also account bulk job creation.

7. INDIA’S MEGA REFORM –GST SET FOR JULY 1 ROLLOUT: The GST ( Goods and Service Tax) , set to be launched by the government from July 1 onwards will have tax rates of 5,12, 18 and 28% for various goods and services as announced by the government. Some tax experts feel that it could complicate compliance and leave businesses and services at the mercy of an intrusive tax bureaucracy.

8. YOU WILL HAVE TO SHELL OUT MORE FOR BANKING TRANSACTIONS FROM JULY: Transaction Fees in financial services are likely to become expensive after the implementation of GST. The government has put these services under the 18% tax bracket. These services were so far taxed at 15%, this means all the transaction fees will be costlier by additional 3%.

SNIPPETS- 20/05/2017

1. Rs 2.6 TRILLION OF BANK CREDIT MAY TURN BAD IN NEXT 12-18 MONTHS: Domestic rating agency India Ratings & Research has said that around 2.6 trillion (Rs 2.6 lakh Crores) of corporate and SME loans in the banking system may turn bad in the next 12 to 18 months. The report says that Indian banks are sitting on unrecognised stressed loans worth 7.7 trillion, out of which a potentially Rs 2.6 trillion of corporate and SME loans will be recognised as bad loans by fiscal 2019. If this happens, then banks are in for a tough time which will affect their bottom line very badly.

2. RBI EASES NORMS TO SET UP BANK BRANCHES: The Reserve Bank of India has eased the norms of setting up bank branches. Any bank outlets manned by either their staff or its business correspondents where services are provided for a minimum of 4 hours per day for at least 5 days a week will be called a bank outlet. And any branch opened in any tier III, tier IV centre of North-Eastern States, Sikkim and Left wing Extremism ( LWE) affected districts, then it will be considered as equivalent to opening a branch in unbanked rural centre( URC).

3. NBFCs’ CASH IN ON INDIAN BANKS’ BAD LOAN PAIN: With Indian Banks struggling with bad loans for the past two years, Non-Banking Financial Companies (NBFCs) have started lending rigorously as they are not as strictly regulated as banks. With this their share of total lending is rising year on year. With the stressed loans scenario, Indian Banks have become extremely cautiousin extending new credit. The process of approving loans has become lengthier and requires lots of paperwork. NBFCs’ SME loans though a bit costlier than those offered by banks, are processed more quickly and require less paperwork. The share of NBFC in overall loans will rise by 3% to nearly 18% over the next two years.

4. INDIA NOW WORLD’S MOST EXPENSIVE STOCK MARKET: With the markets soaring to record highs, India now is the world’s most expensive market. At a lifetime high of 30,658.77, the benchmark Sensex trades at a price-earnings multiple of nearly 18 times estimated one year forward earnings. India’s market capitalization hit $2 trillion for the first time ever.

5. SBI TO ALLOW ATM WITHDRAWALS VIA e-WALLET: State Bank of India will introduce new facility that would enable withdrawal of cash through ATMs using the bank’s mobile wallet. However, the bank will charge Rs 25 for each cash withdrawal from mobile wallet via ATM.

6. BANKING SCENARIO CHANGING RAPIDLY, THEY SHOULD HAVE “CFOs,” AND “CTOs”: With rapid changes in banking sector, the RBI has urged banks to appoint qualified chiefs to head critical finance and technology functions. The RBI has urged the banks to appoint Chief Financial Officers ( CFOs) and Chief Technology Officers ( CTOs) and has come out with minimum qualifications for these posts. It said a CTO should be an engineering graduate or hold Masters in Computer Applications, and the CFO should be a chartered accountant with an experience of 15 years in both the cases. It says a CFO and CTO in banks’ management structure would play a crucial role in strengthening and sustaining the banks’ risk governance framework.

7. LIC BOOKS 72% PROFIT AT Rs.19,000CRORES IN FY’17: Life Insurance Corporation of India has booked a whopping 72% more profit at Rs 19,000 crores in FY’17. LIC’s market share in terms of number of policies stood at 76.09%, nearly 2% increase compared to last year. It has increased its market share to 71.07% from 70.61%.

SNIPPETS- 13/05/2017

1. BANK UNIONS URGE THE GOVDERNMENT AND RBI TO REVEAL NAMES OF TOP CORPORATE WILFUL DEFAULTERS: All major Bank Unions have urged RBI and the government to reveal the names of top corporates who are “wilful-defaulters”. According to the Union, the position of non-performing assets ( NPAs) of public sector banks will worsen if names of top corporate wilful defaulters is not revealed. It said that the RBI and government should act fast in this aspect and along with naming them, they should be treated as criminal offenders. The large corporate NPAs account for more than 60% of public sector banks’ NPAs.

2. MINISTRY OF FINANCE SHOULD BE ABLE TO INFUSE $27 BILLION INTO PUBLIC SECTOR BANNKS BY 2019: As per a report by Bank of America Merril Lynch ( BOfMAL), a global financial services, the Ministry of Finance should be able to infuse $27 billion of capital into PSU banks by 2019. According to the report the PSU banks capital risks are overdone and the government is ready to address their asset quality to support recovery.

3. RBI GETS GOVERNMENT’S NOD TO PROCEED AHEAD ON INDIA’S BIGGEST BANKING CLEAN-UP: The Reserve Bank of India will begin the course of action on its biggest banking clean-up exercise as President Shri Pranab Mukherjee promulgated an ordinance, authorising RBI to issue directions to banks to initiate insolvency resolution process in the cases of loan defaults. This will help the banks in a big way to tackle toxic loans.

4. NEW FACILITY LAUNCHED TO LINK AADHAAR WITH PAN : The Income Tax Department has launched a new e-facility to link a person’s Aadhaar with PAN. This is a mandatory procedure for filing income tax returns. For this the department’s e-filingwebsite ( incometaxindiaefiling.gov.in) has created a new link on its home page making it easy to link the two unique identities of individuals. The link requires a person to punch in his/her PAN no , Aadhaar No and the exact name as given in the Aadhaar card. After verification from UIDAI, the linking will be done and if here is any mismatch then Aadhaar OTP will be required.

5. RBI DECLINES TO PROVIDE DETAILS OF NOTE BAN PROCESS: Six months after the demonetization, the Reserve Bank of India has declined to share details of the note ban process, saying it would be detrimental to the country’s economic interest. The Central Bank said that disclosing such details may impede future economic or fiscal policies of Government of India.

6. IDBI BANK PUT UNDER WATCH BY RESERVE BANK: Reserve Bank of India has initiated “prompt Corrective action” (PCA) on state owned IDBI Bank in view of its high non-performing assets (NPA) and negative return on assets. According to IDBI Bank officials this will not have any material impact on the performance of the bank and will contribute to improving internal controls of the bank and improvement in its activity.

SNIPPETS- 06/05/2017

1. ACCOUNTS WITHOUT "FATCA"CERTIFICATION TO BE BLOCKED FROM MAY 1st ONWARDS: Bank accounts of individuals and entities who have not submitted self-certification in order to comply with the provisions of the Foreign Account Tax Compliance Act ( FATCA), by April 30th will be blocked as per the directions of CBDT( Central Board of Direct taxes). This means those who have not complied with the said self-certification will not be allowed to transact any business in his/her account.

2. RBI, COMMERCIAL BANKS SPEND Rs. 21,000 CRORE ON CURRENCY MANAGEMENT: NITI Aayog CEO has said that the Reserve Bank of India and other commercial banks spend Rs. 21,000 crore every year on currency management operations. This roughly works out to 1.7% of GDP. But since India is moving towards cashless society, as the digital transactions rise in volumes, this cost will come down due to less printing, storing, transporting, verifying and replacing of currency.

3. RBI DEPUTY GOVERNOR Mr. VIRAL ACHARYA CALLS FOR "ALL-OUT" SALE OF SOME WEAK PUBLIC SECTOR BANKS: Reserve Bank Deputy Governor Mr. Viral Acharya has said that the time may have come to “Re-privatise” some of the weak public sector banks, as the government is taking steps to arrange funds to capitalise bad banks. According to Mr. Acharya, this would reduce the overall burden of the government to inject the capital and will help the government to preserve its hard earned fiscal discipline. This remark has raised a storm in the banking industry as most of the Bank Unions have strongly condemned the statement.

4. INCOME TAX NET WIDENS, NUMBER OF TAX PAYERS INCREASE BY NEARLY A CRORE: As the government turns the heat on black money, the number of people who filed tax returns increased by around 95 lakhs. The government has been looking to widen the tax net as barely a little over 3 % of the population is said to pay income tax. But this time around, as the government tightened the noose through demonetization and other measures, as many as 5.28 crore returns were e-filed in FY 16’, a rise of 22% over the preceding year.

5. FINALLY GOVDERNMENT PROPOSES ORDINANCE TO HELP BANKS DRIVE OUT OF NPA NET: Finally the cabinet has cleared the non-performing asset (NPA) resolution package that includes proposing an ordinance to empower the Reserve Bank of India to more effectively deal with bad loans. This move will pave the way for a long awaited initiative aimed at cleaning up the balance sheets of banks burdened with bad loans. This resolution has been sent to the President for approval and once this is approved the details of the resolution will be shared. Changes will be affected in Section 35A of Banking regulation Act and these changes will empower RBI to give directions to banks to effectively resolve NPA issues.

6. GOVERNMENT KEEN TO MOVE AHEAD WITH MORE PSB CONSOLIDATION: With the recent success of the merger of associate banks with SBI, the government is keen on further consolidation of some of the public sector banks with an aim to create only a few banks of global size and scale. The government will soon undertake the study on further consolidation of Indian Banks and look at various options for merger among the remaining 21 public sector banks.

SNIPPETS- 22/04/2017

1. BANK CREDIT SLOWEST IN FINANCIAL YEAR 2017: Growth in bank credit in financial year 2017 has turned out to be the lowest in over 60 years. The state owned banks have achieved a growth of only 5.1% in FY 2017. According to a report released by RBI a large part of the growth in lending has come in the last month of March 2017 when banks disbursed Rs 3.16 lakh crore. But even after this last minute surge in disbursements, loan growth for the whole year was Rs 5.1% as against 10.3% last year. As against this, the banks have ended the year with an 11.8% growth in deposits.

2. SECURITIES AND EXCHNAGE BOARD OF INDIA (SEBI) MAY ALLOW INVESTORS TO BUY MUTUAL FUNDS VIA DIGITAL WALLET: SEBI is considering a proposal to allow investors to buy mutual funds worth up to Rs 50,000/- through digital wallets to make it easier for investors to purchase these instruments, especially by young generation. This would help in speedy and easy transactions.

3. FINANCE MINISTRY EXPESCTS 6 BANKS TO RAISE FUNDS VIA FPO: The Finance Ministry is expecting that at least 6 banks will hit the capital market to raise funds and ease the pressure on the government of pumping in capital to these banks. The Finance Ministry Official states that it is up to the individual banks to decide to tap the capital market but they expect that at least half a dozen banks would take advantage of the opportunity and raise capital from the market.

4. GST: GOVERNMENT LOOKING TO KEEP SINGLE RATE FOR EACH PRODUCT GROUP TO AVOID COMPLEXITY: After having opted for multiple rates under the upcoming GST ( Goods and Service Tax) regime, government is looking in to the aspect of keeping single rate of tax on the same type of products to ensure that the tax structure does not get too complicated. For example all types of air conditioners/mobile phones/footwear etc., will attract single rate of tax. This kind of single rate structure for one product group will bring simplicity and make implementation easy.

5. SBI SAYS MERGER TO BOOST PROFIT BY Rs 3,000 CRORES IN THREE YEARS: SBI chairperson Ms Arundhati Bhattacharya has said that as a result of the merger of 5 of its associate banks with SBI ,there will be a boost to annual profits of as much as Rs 3,000 crore in three years. This is the result of cost and efficiency gains from absorption of associate banks. She has also predicted a turnaround in India’s weak credit cycle this financial year.

6. RBI INSTRUCTIONS FOR MORE PROVISIONING TO HIT BANKS’ PROFITABILITY : Reserve Bank of India has asked banks to increase provisioning for even standard assets as a precautionary measures. Due to this higher provisioning, profitability of the banks will take a hit. Particularly large banks like SBI, ICICI Bank, Axis Bank, Yes Bank, to name a few, are likely to set aside a higher amount than previously anticipated as some loans would have to be classified as non-performing.

SNIPPETS- 15/04/2017

1. RBI PROPOSES LONG-TERM FINANCE BANK: Reserve Bank of India has proposed setting up of Long-Term Finance Banks, specially to fund infrastructure and green field projects of industries. The minimum capital requirement will be Rs. 1,000 crore. As per the eligibility criteria, big Industrial houses cannot take more than 10% stake in these banks. These banks will be exempt from opening branches in rural and semi urban areas and will not lend to agriculture and weaker sections of the society.

2. BANKS GET TIME TILL JUNE 30 TO OBTAIN PAN FROM ACCOUNT HOLDERS: The tax department has given banks three more months till June 30th to obtain Permanent Account Number (PAN) or Form-60 from all account holders as it looks to tighten the grip around tax evaders. After an estimated Rs. 15 lakh crores in junked currency notes coming back into the banking system post demonetization, the tax department has started analysing the bank deposit trends.

3. NO DEADLINE FOR INTRODUCTION OF SHARIA BANKING IN INDIA: Islamic or Sharia Banking is a finance system based on the principles of not charging interest, which is prohibited under Islam. Responding to an RTI application, the RBI has said that it has not taken any steps to introduce “Sharia Banking window” in banks across India. However, on instructions from the central government RBI has examined the legal, technical and regulatory issues in this respect and has submitted a detailed report to the government.

4. FINANCE MINISTRY MAY ASK SEBI TO EXTEND PUBLIC FLOAT DEADLINE FOR PSBs: As per the Public Float guidelines of SEBI, government stake in Public Sector Undertakings should be 75% or less by August 2017. There are seven public sector banks where the government holding is above 75%, post second round of capital infusion in March 2017. Efforts are being made to reduce the government stake and to meet SEBI’s public float guidelines but in case some banks are unable to do so then the government will seek exemption in such cases.

5. AMAZON GETS RBI NOD FOR E-WALLET IN INDIA: Amazon India has received approval to launch its own digital wallet, paving the way for the online retailer to gain a slice of India’s fast growing digital payments business. Amazon’s new wallet service will try to address a vital problem in the world of payments as it will help customers to bypass the two-step authentication process for online payments using credit or debit cards thus making the process smoother for online shoppers.

6. RBI TALKS TOUGH ON WEAK BANKS: The Reserve Bank of India has come out with a revised set of “ Prompt Corrective Action” (PCA) – steps that it will take to get failed banks on track. Banks with unsound financials may face the prospects of a merger or winding up or even risk their board and management being sacked by RBI. These are some of the extreme measures/steps that the Central Bank has in mind for banks that badly breach the threshold for bad loans and minimum capital requirements. RBI has said that a shortfall of the common equity tier I capital by 3.625% from the prescribed limits, then that bank will be identified as a likely candidate for resolution through tools like amalgamation, reconstruction or even winding up. There are new trigger points for the net non-performing assets as well, which call for tougher actions.

SNIPPETS- 08/04/2017

1. RESERVE BANK OF INDIA TO ISSUE Rs.200 NOTES: The Reserve Bank of India has cleared a proposal to issue Rs.200 currency notes from June 2017. According to a report by India Today, the new note is already in the pipeline but RBI is only awaiting instructions from the Central government to go ahead with the printing procedures.

2. BAN ON CASH TRANSACTIONS OF ABOVE Rs 2 LAKH NOT APPLICABLE TO BANKS AND POST OFFICE WITHDRAWALS: The Finance Act 2017 provides that no one can deal in cash in excess of Rs 2 lakh in a single day, in respect of a single transaction or transactions relating to one bill/event or occasion. The Central Board of Direct Taxes has clarified that the ban on cash transactions of more than Rs 2 lakh a day will not apply to withdrawals from banks, post office savings account, and cooperative banks. The restriction will also not apply to any receipt by government, banking company, post office savings bank and cooperative banks.

3. BANKS WANT RBI TO RELAX NORMS FOR LOANS TO HIGHLY INDEBTED FIRMS: Effective April 1, banks have to set aside higher provisions for loans given to highly indebted firms. But, under the International Financial Reporting Standards ( IFRS) norms, banks will not get any relief on any kind of exposure to indebted companies. Hence banks have requested the RBI to give them more time.

4. GOVERNMENT ASSURES THAT THERE IS NO PLAN TO DEMONETISE Rs.2,000 NOTES: The government has assured that there is no plan to demonetise Rs.2,000 notes. The government has clarified that these are only rumours and has requested the public and the press not to go by such rumours.

5. LINK AADHAAR CARD AND PAN CARD: Both PAN Card and Aadhaar card are unique identification cards that serve as proof of identity that are necessary for registration and verification purposes. Now the government has urged all entities across the country to link the PAN cards with the Aadhaar Cards. By linking these two cards the government will be able to keep tabs on taxable transactions of a particular individual or entity. This will also not allow anyone to avail multiple PAN cards. Those who have linked their PAN and Aadhaar cards will be able to file their E-returns with ease and they no longer have to submit their IT acknowledgement to the department. There are rumours that linking of PAN card with Aadhaar card will be made mandatory in future.

6. NEFT TRANSFERS TO BE FASTER AS RBI CUTS CLEARANCE TIME: RBI has decided to slash the clearance time for National Electronic Funds Transfer (NEFT) which will enhance the efficiency and speed of the electronic payment system. Henceforth the NEFT settlement cycle will be reduced from hourly batches to half hourly batches, as a result of which the number of settlement batches will be 23, adding 11 more additional settlement batches.

7. PAYMENT VIA UNIFIED PAYMENTS INTERFACE (UPI) INCREASES: The value of transactions made through UPI channel in March 2017 rose by 25.7% over the previous month to Rs. 2,390 crores. The volume of such transactions jumped by 47.6%. Out of the 2.2 lakh transactions per day, around 80,000 to 90,000 transactions are done through BHIM app.

SNIPPETS- 01/04/2017

1. SBI TO CUT WORKFORCE BY 10%, TO REDUCE HIRING: Post-merger with 6 of its associate banks, SBI’s total workforce will see a reduction by at least 10% over next two years due to attrition, reduced hiring, announcement of VRS and digitisation. Currently the workforce of SBI is 2,07,000 and post-merger it will be 2,77,000. Post-merger the hiring will also be reduced by 50%. In 2016-17 the Bank hired 19000 people but post-merger it may hire only 5000-6000 fresh recruits for the next few years.

2. GOVERNMENT SET TO TARGET TOP WILFUL DEFAULTERS: The government could launch a crackdown on 5-10 big companies perceived to be among the top 50 wilful defaulters that account for a bulk of banks’ non-performing assets ( NPAs) . The finance ministry and RBI are stepping up efforts to tackle the issue of massive bad loans. Although a detailed final course of action is still in the process, the specific action plan will be decided in consultation with Prime Minister’s Office.

3. KOTAK BANK LAUNCHES “811- ZERO BALANCE, ZERO CHARGE ACCOUNT”: Private sector lender Kotak Mahindra Bank has announced the launch of “811” savings bank account scheme. This scheme is inspired by Prime Minister Sri Narendra Modi’s November 8 (Demonetization) move. “811” is part of Bank’s existing banking app. It will offer an interest rate of 6% on savings account balances with “zero balance with zero charges”. Only Aadhaar number and PAN no are required to open the account. It is an UPI enabled app, which offers over 100 features and is a combination of regular bank account, mobile account and digital wallet.

4. SBI LAUNCHES “UNNATI” CREDIT CARD SCHEME: State Bank of India has launched “ Unnati Credit Card Scheme” for its customers holding an account with a minimum balance of Rs 25,000/- . Only valid KYC documents and an application are needed to get the said credit card. The Bank’s aim is to bring more users in digital mode. For the first four years the bank will not charge any credit card fees.

5. BANKS LOOKING AT LOWERING SAVINGS ACCOUNT INTEREST RATES: With falling loan-deposit ratios, a weak loan growth and compressing spreads combined with increasing bad loans (NPAs), banks are looking at the possibility of lowering savings bank interest rates so as to improve their operating profits. This is as per a report by investment banking firm- Jefferies. According to the report, a 50 basis point cut in savings interest rate would result in around 8% improvement in the sector’s core pre-provision operating profits.

6. E-WALLET COMPANIES CHOKE ON NEW RBI NORMS: A fresh guideline issued by RBI for digital wallet companies has left the sector gasping. The fresh guidelines has raised the minimum capital requirement for a digital wallet provider to Rs 25 crore, mandated full compliance with Know Your Customer (KYC) norms and introduced limitations on domestic remittances.

7. FILING OF TAX RETURNS TO BE LESS PAINFUL AS GOVERNMENT SIMPLIFIES ITR FORMS: A crisp and simplified income tax form for the salaried individuals will be introduced from 1st April. Some of the columns have been removed to make the form simpler and easier to fill.

SNIPPETS- 25/03/2017

1. SBI CHIEF AMONG FORTUNE’S 50 GREATEST LEADETRS OF THE WORLD: Ms Arundhati Bhattacharya, Chairperson of State Bank of India has been named by Fortune magazine among the world’s 50 greatest leaders who are transforming the world and inspiring others to do the same. She is ranked 26th on the list of Fortune’s Greatest leaders. Ms Bhattacharya is the first woman to be ranked among the fortune’s top 50 leaders.

2. RBI PUTS 4 PSU BANKS UNDER WATCH ON ASSET QUALITY CONCERNS: The Reserve Bank of India has put 4 public sector banks under watch and advised them to stay off risky assets so that their financial health is not stressed further. IDBI Bank, Indian Overseas Bank and UCO Bank are in the list while the fourth bank’s name could not be immediately ascertained. These four banks have been advised both by RBI and Finance Ministry to improve their financials, look for avenues for capital infusion and create self-sustaining model by selling assets.

3. NPA RESOLUTION MECHANISM NEED MORE TEETH: RBI Deputy Governor Mr. S. S. Mundra has said that there is need to further strengthen existing stressed asset resolutions mechanisms like oversight committees and joint lenders forums. However no timeline has been finalised as to when RBI will come out with modifications.

4. RBI SAYS FARM LOAN WAIVER AFFECTS CREDIT DISCIPLINE: Reserve Bank of India has expressed concern over farm loan waiver affecting credit discipline. Earlier SBI Chief Ms Arundhati Bhattacharya had expressed the same feelings as she said that it will disturb credit discipline among borrowers, since they will keep expecting more such loan waivers in future and then those future loans will remain unpaid.

5. SBI TO SHUT DOWN 47% OF ASSOCIATE BANKS’ OFFICES AFTER MERGER: State Bank of India which will see 5 associate banks merge into it on April 1st, has decided to shut down almost 47% of the offices of these banks, including the head offices of three banks. The process will start from April 24th.

6. ASSOCIATE BANK BRANCHES TO BECOME SBI BANK BRANCHES FROM APRIL 1st : With the merger of all the five associate banks, SBI is expected to become a lender of global proportions with an asset base of Rs 37 lakh crores ( $ 555 billion) with 22,500 branches and 58,000 ATMs. The branches of all these 5 associate bank branches will begin to function as SBI branches from April 1st.

7. GOVERNMENT APPROVES SECOND TRANCHE OF CAPITAL INFUSION IN PSU BANKS: The government has approved the second instalment of capital infusion in public sector banks to enhance their capital base. The second round of funding entailing about Rs 8,000 crore is based on strict parameters. The first tranche was announced in July 2016 with the objective of enhancing their lending operations and enabling them to raise more money from the market.

SNIPPETS- 18/03/2017

1. PSU BANKS RUSH TO SELL STRESSED ASSETS: Public Sector Banks have started rushing to sell Non-Performing assets (NPAs) in the last quarter of the fiscal ending March 2017. As strict norms on sale of stressed assets come into effect from April 1, 2017, all banks have lined up more than Rs.20,000 crore of NPAs to be sold to Asset Reconstruction Companies ( ARC). However banks putting these stressed assets on blocks do not mean they will be sold, as most of the time these loans end up not being sold as there is a big difference in the price banks demand and what the ARCs are willing to pay.

2. SBI ANNOUNCES Rs.6,000 CRORE TRACTOR LOAN SETTLEMENT SCHEME: State Bank of India has announced a one-time settlement scheme for tractor and farm mechanism loans, which are in the doubtful or loss asset category as on 30th September 2016. This scheme will remain open till March 31st. Loans worth Rs.6,000 crore would be eligible under the said settlement scheme. The bank is willing to write off up to 40 % of the outstanding principal amount of the loan under the scheme.

3. NO LIMIT ON CASH WITHDRAWALS FROM MARCH 13th: The Reserve Bank of India has ended all the curbs on withdrawals from savings bank account from March 13th onwards. Earlier the weekly withdrawal limit per savings bank account had been raised to Rs. 50,000/- from Rs. 24,000/- with effect from February 20th and all limits on cash withdrawal have now been withdrawn.

4. SBI CREATES WHOLLY-OWNED SUBSIDIARY TO MANAGE REAL ESTATE: State Bank of India has incorporated a specialised firm- SBI Infra Management Solutions Pvt Ltd (SBIIMS) , which will manage its premises and real estate property across the country. The primary role of the new entity will be to handle transaction management, advisory services, project management etc. The move is seen as public sector bank’s efforts to exit non-core activities to improve balance sheet as per government guidelines.

5. HDFC BANK DIGITISES OVER 1,200 DAIRY CO-OPERATIVES ACROSS INDIA: In line with government’s initiative for a cash-less society, HDFC Bank under the aegis of its “ Milk to Money” (M2M) programme has digitised payments at over 1,200 diary co-operatives in the country. M2M programme will benefit about 3.2 lakhs dairy farmers across 16 states, bringing these farmers into the organised banking system.

6. BANKS MAY GET INCENTIVES FOR DIGITAL PUSH: Government may give banks an incentive of up to Rs 10/- for each transaction to encourage merchants to adopt digital modes of payment. This is aimed at achieving the objective of cash-less economy. The incentive is aimed at encouraging banks to bring more merchants into the new payments ecosystem and build the requisite infrastructure.

7. RBI TO OPEN UP UPI FOR DIGITAL WALLETS: Reserve Bank of India prepares to open up the Unified Payment Interface (UPI) platform for digital wallets such as Paytm and Mobikwik. Once this is done, the wallet companies will become inter-operable. RBI is set to issue guidelines shortly on inter-operability and Know your Customer (KYC) norms for digital wallet companies.

SNIPPETS- 11/03/2017

1. NBFC CASH LOAN AGAINST GOLD RESTRICTED TO Rs.25,000/-: As per the latest guidelines from RBI, Non Banking Finance Companies( NBFC) cannot lend more than Rs 25,000/- in cash against gold. The earlier provision for NBFC was of Rs 1 Lakh. Now RBI has reduced the limit to Rs.25,000/-, in line with the provisions of Income Tax Act. This is an important guideline considering the government’s focus on cash less economy.

2. SBI JUSTIFIES PENALTYFOR NON-MAINTENANCE OF MINIMUM BALANCE IN ACCOUNTS: Last week the country’s largest bank SBI decided to re-introduce penalty on nonmaintenance of minimum balance in SB accounts and also revised charges on other banking services, which come into effect from April 1. The move has faced lot of criticism from all corners. But SBI has justified its move saying the bank needs to impose some charges to balance the burden of managing a large number of no-frills Jan Dhan Accounts. It further clarified that the penalty would not apply to Jan Dhan accounts.

3. NPAs AT RECORD HIGH, ITS TIME TO ANNOUNCE THE NAMES OF DEFAULTERS: A key parliamentary panel- Public Accounts Committee ( PAC) has now favoured naming and shaming Corporate houses which default on repayment of bank loans. The PAC feels that such a move may help financial institutions get back their money. Out of the 6.8 lakh crore of Non-Performing Assets ( NPA) of public sector banks, a whopping 70% are those big corporate houses. In case of farmers and retail loans banks act strong and they go to borrowers homes to recover money and even their name and photograph is published in the newspapers. But when it comes to big corporates they don’t reveal the names.

4. FINANCE MINISTRY GIVES IN-PRINCIPLE NOD FOR ESOPs BY PSU BANKS: The Finance Ministry has given its approval to allow public sector banks to offer Employee Stock Option plans (ESOPs) to their employees from next fiscal. This is a move to retain experienced hands by way ofproviding better incentives.

5. STATE BANK OF INDIA LAUNCHES “WORK FROM HOME” FACILITY FOR EMPLOYEES: Country’s largest lender State Bank of India has launched a new facility to enable its employees to work from home. This enables its employees to work while at home using mobile devices to address urgent requirement. The bank will use mobile computing technologies and shall have continuous control over all the enabled devices centrally to manage and secure data and applications. The use of technology and services shall be monitored through carefully designed MIS and dashboard to enable improvements.

6. HDFC BANK LAUNCHES ARTIFICIAL INTELLIGENCE – DRIVEN CHATBOT EVA: HDFC bank has announced the launch of an electronic virtual assistant ( EVA), an artificial intelligencedriven chatbot for customer service. EVA is India’s first such chatbot and can answer millions of queries across multiple channels instantly.

7. FINANCE MINISTRY INSTRUCTS STATE-OWNED BANKS TO EXIT NON-CORE BUSINESSES: As a part of capital raising exercise, the Finance Ministry has advised state-run banks to prepare a list of their non-core businesses and look at disposing them at an appropriate time. Most of the banks have insurance ventures or capital advisory firms, besides holding stake in financial institutions such as stock exchanges.

SNIPPETS- 04/03/2017

1. IDBI BANK FREEZES LENDING & BRANCH EXPANSION PLANS: The government owned IDBI Bank has decided to freeze lending and branch expansion plans. This decision has been taken by the bank’s management after it posted a historic loss of Rs 2,255 crores in the third quarter. This is an effort to conserve its capital. Now the Bank has decided to concentrate on bad loan recoveries which have touched almost 20% of its loan book. Knowing that its capital is depleting, the bank has started a real war on its defaulters, as they have created crack teams and bad accounts have been distributed to individuals across the bank for recovery.

2. GOVERNMENT SAYS NO PLANS TO INTRODUCE Rs.1,000/- NOTES: The government has no plans to introduce Rs.1,000/- notes. There are lot of complaints of cash shortages at ATMs and this is being addressed by focussing on increasing production of lower denomination currency notes.

3.NEW RBI DEPUTY GOVERNOR Mr. VIRAL ACHARYA TALKS TOUGH ON UNDER-PERFORMING STATE RUN BANKS: RBI’s new Deputy Governor Mr. Viral Acharya has said India’s under-capitalised banks should be restricted from expanding deposits and loans, to help revive the banking sector burdened by increasing bad loans. Under-capitalised banks should be subjected to some tough and corrective actions. He said such actions should entail no further growth in deposits base and lending and they must not be allocated with any capital infusion. The RBI Deputy Governor further said it’s not clear why so many public sector banks were needed,while the system will be better off if they are consolidated into fewer but healthier banks.

4.GOVERNMENT INSTRUCTS BANKS TO GET ALL ACCOUNTS ON NET BANKING BY MARCH 31st: The government has instructed banks to enable internet banking across all accounts by March 31 and mandatorily link them to Aadhaar number to facilitate digital payments and online transactions. This measure will further enable the rapidly evolving digital payments setup in the country and will help in adding new set of consumers to the world of online transactions.

5. CIBIL SAYS MAJOR MSMEs MAY DEFAULT: As per the forecast made by CIBIL , close to Rs 55,000 crore worth bank loans to micro and medium enterprises ( MSME) are close to default. The forecast is based on a machine learning algorithms to predict default probability based on its credit history. As per CIBIL around Rs 12 lakh crore of bank loans are lent to MSMEs, this represents 21% of total bank lending.

6. INDIA WILL SOON HAVE ITS OWN LIVEABILITY INDEX: Taking cue from international practice of rating cities on liveability, India is all set to introduce its own liveability index. Beginning with 100 smart cities, the liveability index would rank all Indian cities on 77 parameters including how they fare in terms of grievance redressalof citizens, pollution control, crime rate, availability of water and power, upkeep of historical buildings, increase in tourist footfalls, education etc. So very soon you will know how “LIVEABLE” your city is.

7. INCOME TAX RETURNS: NO TAX ON Rs 20 LAKH GARTUITY FOR PRIVATE EMPLOYEES: The government has amended the Payment of Gratuity Act where private sector employees will now be able to withdraw up to Rs 20 lakh in tax free gratuity. Till now this tax free gratuity limit of Rs 20 lakh was only for government employees.

SNIPPETS- 25/02/2017

1. ONGC MAY TAKE OVER HPCL OR BPCL: The Economic Times report says that the government is planning to create an integrated oil company under an arrangement in which Oil and Natural Gas Corporation (ONGC) may take over either Hindustan Petroleum Corporation ( HPCL) or Bharat Petroleum Corporation ( BPCL). This is being planned to compete against big rival international and domestic private sector oil firms. The government is a majority stake holder in both HPCL ( 51.1%) and BPCL ( 54.09%). It was highly speculated that the government will merge all three entities to create an industry giant. However, the government feels a takeover will be a profitable route.

2. RBI DEPUTY GOVERNER Mr VIRAL ACHARYA SAYS USING RBI FUNDS TO RECAPITALISE BANKS NOT A GOOD IDEA: RBI Deputy Governor Mr. Viral Acharya has suggested that using part of the Reserve Bank reserves for recapitalising state-run banks may not be a good idea. As per Mr. Acharya when the government dips in to RBI’s balance sheet, for re-capitalisation of state run banks, then ultimately you are dipping into it for fiscal expenditure.

3. SBI CHIEF Ms. ARUNDHATI BHATTACHARYA MOOTS FOR DEDICATED SPECTRUM FOR FINANCIAL TRANSACTIONS: SBI Chairperson Ms. Arundhati Bhattacharya has called for better telecom infrastructure to drive the digital payments agenda of the government and suggested this can be achieved by ensuring dedicated spectrum for financial transactions alone. .

4. STATE RUN BANKS HAVE TO ADOPT LATEST TECH AND BE AGILE: Reserve Bank of India Deputy Governor Mr. S SMundra has warned that traditional banks should quickly convert themselves into a new-age digital banks or else they face the risk of becoming history. Mr. Mudra opines that the age of fintech is here as the fintech companies are disrupting every facet of the traditional financial services business and have emerged as a challenge to the banking industry. He quoted a recent PwC global report which says up to 28% of the banking and payments business are at risk by 2020.

5. EXPECT A VISIT FROM TAXMAN IF YOU HAVE IGNORED I-T DEPT’S EMAIL: Income tax officials could soon be at your door step if you have deposited huge amount of cash during note-swapping exercise last year, and have not yet explained the source of funds. If people have not come forward to explain the source then some kind of verification is needed especially in cases that involve deposits of large sums.

6. CASHLESS ECONOMY- NPCI LAUNCHES "BHARAT QR CODE": In a bid to motivate people to switch to electronic payments, and to change the Indian economy to cashless economy, the National Payments Corporation of India (NPCI) in association with Visa and MasterCard, has launched Bharat QR code. The Bharat QR code is mandated by the government to enable digital payments without card swiping machines. A QR code allows payments without entering the merchant’s ID or phone number. Users can make payments by scanning the code and entering the transaction amount. It does not require swiping of any card either. For the user, it requires a smart phone with internet connection. As of now 15 banks have come on board to deploy the Bharat QR code. This is in addition to the steps already taken by the Government by way of Demonetization of high value currency and BHIM App

SNIPPETS- 18/02/2017

1. STATE RUN BANKS TO OFFER “ESOPS” TO STAR PERFORMERS: Employees of state run banks may stand eligible for Employee Stock Options (ESOPS) from next fiscal. This is as per the suggestion made by the Banks Board Bureau (BBB). This will be kind of a reward to bank staff based on their performance. The total ESOPs will be a certain percentage of Bank’s net profit. For large banks the employee stock option plan could be as much as 5% of profit after tax.

2. RBI PROPOSES LOW MDR FROM APRIL 1st TO KEEP DIGITAL PAY MOMENTUM: The Reserve Bank of India has proposed to drastically cut the Merchant Discount rate (MDR) charges on debit card payments from April 1st with a view to maintain the momentum of digital transactions post note ban. The Merchant Discount Rate charge, which is charged to merchants on debit card transactions will be as low as 0.4% or 0.3% of the transaction value.

3. RBI TO REIMBURSE BANKS’ MDR CHARGES ON DEBIT CARD PAYMENTS TO GOVERNMENT: RBI in a notification has said that it will reimburse banks the MDR ( Merchant Discount Rate) charges on debit cards used for payment of tax and non-tax dues to the Government of India with effect from January 1, 2017. Banks have been asked to forward their claim for reimbursement of MDR along with statutory auditor’s certificate on a quarterly basis.

4. SBI CHIEF SEEKS MORE CLARITY, DISPENSATIONS TO RESOLVE NPAs: State Bank of India Chairperson Ms. Arundhati Bhattacharya has said banks need more clarity and dispensations to resolve the stressed assets problem. Banks should be allowed to amortise losses on account of haircuts (estimating Investor losses in debt restructuring) they will have to take while resolving a bad asset ( NPA) .

5. BANKS RUSH TO BUY CYBER SECURITY COVER AS DIGITAL PAYMENTS RISE: At a time when cyber threats are on the rise for banks for increasing cashless transactions and effects of demonetization, insurers see rise in demand for cyber insurance and cyber liability insurance. The present industry base cyber insurance is currently as low as Rs 60 crore. There are various cyber insurance covers available but it is the cyber liability insurance which is in maximum demand.

6. INDIA RATING SAYS BANKS’ CAPITAL NEEDS IS Rs 91,000 CRORES: The Government , which owns majority in nearly two dozen banks, has plans to inject Rs 20,000 crore in to those banks over the next financial years beginning April. But as per the India Rating & Research, banks need almost Rs 91,000 crore to grow at a bare minimum pace of 8 to 9% on an average. Some of the eminent analysts have said that the government will have to increase the capital injection significantly to keep some weak banks afloat as global Basel III banking norms are due to be fully implemented by march 2019.

7. TAX DEPARTMENT SCANS OVER ONE CRORE ACCOUNTS IN CLEAN MONEY DRIVE: The income tax department has done data analytics in more than one crore accounts through its data bank and has tried to match with tax payer profile. In a bid to clamp down on un-accounted money deposited in to the bank accounts post demonetization, the income tax department has scrutinized as many as one crore accounts and has asked 18 lakh people to explain the source of funds.

SNIPPETS - 11/02/2017

1. CASH WITHDRAWAL CAP TO GO FROM MARCH 13th: The Reserve Bank of India has announced that restrictions on cash withdrawals from savings bank account would be lifted by March 13, in two phases considering the current pace of remonetisation and infusion of currency in the market. In the first phase from February 20, the limits on cash withdrawals from savings bank accounts would be increased to Rs 50,000/- a week, and from March 13, there will not be any ceiling on withdrawals. From February 1St onwards the RBI has lifted the cap on cash withdrawals from ATMs provided it is within the weekly limit.

2. RESERVE BANK OF INDIA TO SET PANEL TO STRENGTHEN CYBER SECURITY: The Reserve Bank of India on Wednesday decided to set up an inter-disciplinary panel on cyber security in a bid to strengthen cyber security system, examine various threats and suggest measures to deal with it. The panel will review the threats inherent in the existing or emerging technology on an on-going basis. RBI has issued guidelines to banks, mandating cyber security preparedness for addressing cyber risks.

3. RESERVE BANK OF INDIA WANTS MORE TIME TO TALLY OLD NOTES: The Reserve Bank of India has still not divulged the details about how much in demonetized currency had been deposited with banks after the general window for depositing old notes got closed on December 30. RBI said that the cash received was still being checked with the accounts. A window to deposit old notes is still open with the RBI. So in all probability it will be somewhere in June that the RBI will tally all the notes and will be in a position to declare the exact amount of deposit of old notes.

4. RESERVE BANK SAYS “BAD BANK” CONCEPT COULD HELP IF DESIGNED RIGHT: The Reserve Bank of India Deputy Governor Mr. Viral Acharya has said that creating a so called “Bad Bank” to handle record NPA ( bad) loans in the banks’ could help if designed properly. In its Economic survey released on January 31ST , the Finance Ministry had suggested setting up a “Bad Bank” which would buy NPA (bad) loans from banks’ and deal with them separately through methods including conversion of debt to equity.

5. HDFC BANK SAVINGS ACCOUNT HOLDERS WILL HAVE TO PAY EXTRA FOR CASH TRANSACTIONS: In a bid to discourage cash transactions, HDFC Bank has decided to increase the fees for savings bank account holders on activities involving cash transactions. This is a move to encourage its customers to shift to cash-less or less-cash regime and use digital mode for transactions.

6. RESERVE BANK OF INDIA TO PUT NEW Rs 100 BANK NOTES IN CIRCULATION: The Reserve Bank of India will shortly announce Rs 100 denomination notes in Mahatma Gandhi series -2005, with the inset R in both the number panels and will bear the signature of Dr. Urjit Patel, Governor, RBI.

7. DEMONETIZATION IRREGULARITIES---156 SENIOR PUBLIC SECTOR BANK OFFICIALS SUSPENDED: As many as 156 senior bank officials of various public sector banks have been suspended and 41 officers have been transferred. These officers have been found involved in irregularities relating to demonetization. On the basis of prima facie involvement in the irregularities, these many officials have been placed under suspension.

SNIPPETS - 04/02/2017

1. RBI LIFTS CAP ON DAILY WITHDRAWALS FROM ATMs, & CURRENT ACCOUNT: After nearly three months of cash rationing finally Reserve Bank of India lifted the cap on daily cash withdrawals from ATMs and current accounts effective from 1st February 2017. But retained the cap of Rs 24,000/- from savings bank accounts.

2. BUDGET GIVES MORE RELIEF TO START-UPS: More than 4700 start-ups in the country can now look forward to certain tax benefits. The government has extended the profit-linked deduction for start-ups to three years out of seven years from the earlier norm of three years out of five years. Further there are relaxations on income tax exemptions for carry forward losses, provided the holding of the original promoters remains.

3. DIVIDEND OF FAMILY TRUSTS TO BE TAXED IN FUTURE: Promoters holding shares through private trusts will have to pay 10% tax on dividend income for more than Rs 10 lakh. At present income by way of dividend in excess of Rs 10 lakh is chargeable at the rate of 10% for individuals, Hindu undivided Family (HUF) and partnership firms. But now the rule has been extended to include private trusts as well.

4. GOVERNMENT GIVES SWEEPING POWERS TO TAX OFFICERS FOR SERACH AND SURVEYS: The government has armed tax officers with sweeping powers to conduct search and surveys. Now junior officers can conduct an inquiry in a case where no proceedings are pending, without getting sanction from higher authority. This move could lead to lot of harassment for income tax assessees.

5. NOW CYBER CRIMES HAVE TO BE REPORTED TO RBI WITHIN 6 HOURS: The Reserve Bank of India has instructed banks to report any cyber security incidents within two to six hours. This warning has come at a time when the government is pushing digital payments in a big way, including new channels such as Aadhaar Enabled Payment System (AEPS) and the BHIM app launched by the National Payments Corporation of India (NPCI) which runs on the Unified Payment Interface (UPI).

6. FINANCE MINISTER LAUNCHES INDIA POST PAYMENTS BANK: Union Finance Minister Mr. Arum Jaitley inaugurated the India Post Payments Bank ( IPPB) through video conferencing from Delhi. The pilot branches have been launched at Raipur and Ranchi. These payments bank will pose serious competition to traditional banks due to lower cost involved. The launch of India Post Payments bank will prove to be a great step towards financial inclusion in the country. The postman connects every household. They can reach every house for banking activity and if this is tapped and planned properly it will open the doors for door to door banking.

7. ORDINANCE PAVES WAY FOR PSU INSURERS TO GO PUBLIC: State owned general insurance companies can now get listed on the stock exchanges with the recent ordinance by the government on the insurance bill. Government looks to raise Rs.11,000 crores from listing of PSU insurers. This is a step towards meeting the government’s disinvestment target of Rs.72,500 crores in the next fiscal.

BLOG - INDIAN UNION BUDGET 2017

•  FY 18 revenue deficit pegged in at 1.9% of GDP.
•  Fiscal deficit for 2017-18 pegged at 3.2% in line with market expectations.
•  Total Budget of Rs.21.47 Lakh Crores for 2017-2018.
•  No Income tax on income up to Rs.3 lakhs.
•  Income tax rate from Rs.2.50 lakhs to Rs.5 lakhs reduced to 5%.
•  10% surcharge for income between Rs.50 lakhs and Rs.1 crore.
•  One page income tax return proposed.
•  No transaction over Rs.3 lakhs will be permitted in cash.
•  6% presumptive tax for companies with a turnover up to Rs.2 crore doing digital transactions.
•  5% tax exemption for companies having a turnover below Rs.50 crores.
•  Holding period of Long Term Capital Gains for Land & Building reduced to 2 years.
•  Increase in Direct tax collection by 34% after demonetization.
•  Maximum donation receivable from unknown sources by political parties will be Rs.2 lakhs.
•  Propose to reduce tax for small companies with a turnover of less than Rs.50 crore to 25%.
•  Defence capital expenditure Rs.80,000 crores.
•  New FDI policy under consideration.
•  Aadhaar-Pay will be launched shortly. For senior citizens, Aadhaar based Health Cards will be introduced.
•  Govt. doubles lending target of banks to Rs.2.44 lakhs crores
•  Amend Negotiable Instruments Act to protect payees dishonoured cheques.
•  National Highway allocation at Rs.64,000 crores.
•  Unmanned Railway lines to be eliminated by 2020
•  Propose to feed 7000 solar railway stations in medium term.
•  Propose to amend drug rules to ensure drugs available at reasonable prices.
•  Affordable housing to be given Infra status
•  100% rural electrification by May 01, 2018.
•  Propose to finish 1 crore houses by 2019 for those living in kachcha houses.
•  To up crop insurance coverage to 50% in FY 2019.
•  Govt. to set up dairy processing fund.
•  Focus on Rural India - Total allocation for rural sector up by 24% at Rs.187,000 crores.
•  NABARD to digitise 63,000 primary agri co-ops.
•  Additional Rs.20,000 crore allocated to NABARD for long term irrigation fund.
•  SEC 40A (3) amended—cash expenses reduced from Rs 20,000 to Rs 10,000( Foe example, cash salary, cash rent, cash conveyance etc.)
•  New Section 234F introduced for delay in filing income tax returns beyond due date – late filing fee of Rs.5,000/- up to 31st December of the year in which due date of income tax return filing is due and thereafter Rs.10,000/-.
•  Budget agenda was to - Transform Energize and Clean India - TEC India.
•  Oil prices, rising dollar and volatile commodity prices seen as risks to Indian economy.
•  Focus on digitizing India to continue.
•  Service charge on rail tickets booked through IRCTC to be withdrawn.
•  Maximum cash donation any Political party can receive will be Rs.2,000 from one source.

SNIPPETS - 28/01/2017

1.EVEN RBI DOES NOT HAVE ANY IDEA ABOUT FAKE NOTES: The Reserve Bank of India has no confirmed data on the value of the fake currencies detected since the demonetization of Rs 500 and Rs 1000 notes. This is in reply to a query raised under RTI.

2. CASH WITHDRAWAL RESTRICTIONS TO GO AWAY BY FEBRUARAY END: The Reserve Bank of India has recently raised the ATM withdrawal limit to Rs.10,000/- a day but it has maintained the weekly cap of Rs.24,000/- for savings account and Rs.1 lakh for current account holders. But as per SBI estimates, over 80% of currency could be back in circulation by February end, and hence the restrictions on cash withdrawals may be completely lifted by February end.

3. RESTRUCTURED EDUCATION LOANS NOT TO BE TREATED AS NPAs: In order to encourage banks to provide education loans , The RBI has clarified that rescheduling of payment period of such loans due to unemployment of the borrower will not be treated as restructured accounts for computing NPAs. Banks may allow three spells of moratorium ( not exceeding 6 months each) during the life cycle of theeducation loan, taking into account the unemployment/underemployment, and this will not be treated as restructuring of loan account.

4. RBI WORKING ON PLAN TO REDUCE ONLINE CHARGES: The Reserve Bank of India is working on a plan to reduce online transaction costs which the banks at present are charging. This is a positive move to encourage more digital banking.

5. MORE PSU BANKS MAY SKIP DIVIDEND PAYOUT THIS FISCAL: Some Public Sector Banks have already indicated to the Finance Ministry that it may not be possible for them to pay dividend this year as their profits are likely to remain very low due to very poor credit offtake, after effects of demonetization and increase in bad loans.

6. BORROWERS MAY SWITCH FROM BASE RATE TO MCLR: Declining interest rates, driven by demonetization, will prompt existing bank borrowers to shift from base rate system to the new MCLR mechanism as it will help them reduce interest burden and also reduce their repayment cost. MCLR linked advances are estimated to be around 15-20% of the total banking sector advances. This is as per ICRA press release.

7. BANKS’ SEEK TAX RELIEF TO EASE NPA BURDEN: Banks have asked the government for lower taxes in the forthcoming budget, to compensate them for their efforts on financial inclusion and demonetization. They have demanded tax exemption of 100 % on provisions against bad loans. At present only 7.5% of the capital set aside for NPAs and 10% of the rural advances are deducted from gross income of the bank while all other earnings are taxable.

8. ELECTION COMMISSION (EC) REQUESTS RBI TO INCREASE CASH WITHDRAWAL LIMIT IN 5 STATES: The Election Commission has requested the RBI to enhance the weekly cash withdrawal limit from Rs. 24,000/- to Rs.2,00,000/- for candidates contesting elections in the 5 states which will have the state elections soon. The candidates have representedtheir difficulty to Election Commission in meeting their campaign expenditure.

SNIPPETS - 21/01/2017

1. Rs.2 LAKH INSURANCE COVER FOR 3 YEARS FOR JAN-DHAN ACCOUNT HOLDERS ON CARDS: The government is considering an insurance scheme under which all Pradhan Mantri Jan Dhan Yojana ( PMJDY) account holders will be offered Rs.2 lakh free insurance for three years . This will be a big push by the government to create strong social security for the poor. There are around 27 crore account holders under PMJDY and if the proposed insurance scheme provides both accident and life insurance cover, the benefit could cost the government more than 9,000 crores as the government would bear the premium cost for three years.

2. GOVERNMENT MAY LOWER LIMIT FOR QUOTING PAN NUMBER FOR CASH TRANSACTIONS: In a move to further push the momentum it gained for cash-less economy after demonetization, the government may announce big disincentives in the upcoming Budget for usage of cash. One amongst them will be to reduce the threshold limit for quoting PAN card number for cash deposit. The present limit which is Rs 50000/-, may be brought down to Rs 30000/- . In addition to this the government may also announce cash- handling charges for cash payments above a certain limit.

3. REVEAL THE SOURCE OF INCOME IF YOU HAVE DEPOSITED Rs 10 LAKH OR MORE IN BANK ACCOUNT AFTER NOVEMBER 8TH: In the next fortnight, the I-T Department will ask everyone who deposited more than 10 lakh or more in their bank accounts after November 8th to spell out the source of income. A new e-platform put in place by the Central Board of Direct Taxes, will be used to reach out to these account holders who will have to file their response online.

4. THIS YEAR’S BUDGET HAS LOT OF “FIRSTS” : Mr. Arun Jaitley will be the first Finance Minister to have ushered in many changes in this year’s Budget. Here are some of the “FIRSTS” in this year’s Budget:
A) Budgets are normally announced on the last working day of February. But this year, it has been advanced by a month to February 1ST .
B) There won’t be a separate railway Budget. Railway Budget is merged with General Budget from this year onwards.
C) Economic Survey, a snapshot of the state our country is in, will be out on the first day of the Budget session.
D) This is the first time that the finance ministry is going paperless for the Budget. There will be no hard copies of the circulars. All the important documents will be submitted through Union Budget Information System ( UBIS).
E) There will be no plan and non-plan distinction in finance bill. And hopefully the abolition of the Planning Commission will find reflection in the general Budget.


5. WHAT WILL HAPPEN TO YOUR PAYTM-WALLET WHEN PAYTM BECOMES PAYMENT BANK?: The Parent Company, One 97 Communications is preparing to merge Paytm wallet services with the payment bank. And if you are a Paytm wallet holder then your balance amount in Paytm will be transferred to the Paytm Payment bank Limited and this will happen automatically and you need not do anything. The app will continue to work as before and you will continue to use it as before. The company will give you an offer to open a separate account and if u choose to open a payment bank account then you will earn interest on your money in your wallet.

SNIPPETS - 14/01/2017

1. BANK OF BARODA BEATS SBI IN OFFERING CHEAPEST HOME LOAN: Traditionally as it always happens, it is the India’s largest Bank, State Bank of India which offers home loans at cheapest rates. But this time Bank of Baroda has lowered its home loan rate of interest to as low as 8.35% which is the cheapest in the banking industry. This rate will be applicable for customers having a strong CIBIL score, which is a measure of creditworthiness of the borrower. This according to us, will pave way for a literally interest rate war amongst the banks across the country.

2. VERY SOON YOUR CREDIT RATING WILL DETERMINE YOUR HOME LOAN RATE: The interest rate you would pay on your home loan will soon be linked to your credit rating or the discipline you maintain in repaying your existing loans. If your credit score improves you will pay less EMI and is vice-versa. Bank of Baroda is the first bank to link interest rates on home loans to credit scores of the borrower. The bank will initially rely on credit scores of Credit Information Bureau of India (CIBIL) and if this score is above 760 then the lowest rate of 8.35% will be offered. Other banks will take cue from Bank of Baroda’s initiative.

3. LOAN REPAYMENTS WORTH Rs 80,000 CRORE MADE IN CASH AFTER DEMONETIZATION: The government’s financial intelligence agencies which normally analyse data from multiple sources, have found that an estimated that Rs 3 to 4 lakhs crore of tax-evaded income have found its way in the form of cash deposits during the demonetization period. The agencies have also compiled a data where in it is found that more than Rs 80,000 crore in cash deposits in loan accounts as repayments during this demonetization period.

4. YOUR CASH WITHDRAWALS FROM BANK ACCOUNTS MAY BE TAXED IN FUTURE: Among many moves which the government is taking to push the digital transactions in the country, the government may consider a “cash tax” on cash withdrawals from bank accounts. The government is weighing the pros and cons of the proposal under which tax can be levied on cash withdrawals above a certain ceiling from bank accounts. The main aim of the new tax is to curb the scope of cash economy and encourage digital transactions.

5. CURRENCY CIRCULATION DOWN BY ALMOST 50%: The currency circulation or the currency with the public has gone down to 8.9 lakh crore, according o the latest figures released by Reserve Bank of India. The Remonetisation exercise is not keeping pace with the Demonetization. The currency circulation in March 2016 was Rs 16.63 lakh crore.

6. BANK’S BOARD BUREAU SEEKS LONGER TERMS FOR BANK CHIEFS: Vinod Rai, the Chairman of Bank’s Board Bureau (BBB) opines that chief executive officer/ Managing Directors/Executive Directors of public sector banks should have a minimum tenure of six years in order to ensure accountability. Rai further noted that the compensation package of these public sector institutions needs to be improved. The package needs to be more attractive in order to attract talent.

7. NRIs CAN DEPOSIT OLD NOTES TILL JUNE 30th: The Reserve Bank of India has allowed non-resident Indians to exchange the scrapped currency of Rs 500 and Rs 1000 notes till June 30. This facility will be available through RBI offices in Mumbai, Delhi, Chennai Kolkata and Nagpur. While there is no monetary ceiling for exchange of old notes, the limit for NRIs’ will be as per the relevant FEMA (Foreign Exchange Management Act) regulations which is Rs 25000/- per person.

SNIPPETS - 07/01/2017

1. RBI CLARIFIES REGARDING OLD NOTE DEPOSITS: The Reserve Bank of India has issued clarification after various news agencies, citing sources, had come out with estimates of old notes deposited in the banking system. Neither the RBI nor the government has come out with a final official figure in this matter. The Reserve Bank of India in its last official release said that till December 10th, Rs 12.44 lakh crore worth of old notes were returned to the banking system. RBI has already initiated the process and the final figure will be announced soon.

2. GOVERNMENT TO FINALISE SECOND TRANCHE OF CAPITAL INFUSION IN STATE-RUN BANKS: Finance Ministry is likely to finalise the second tranche of capital infusion in public sector banks in the next few days and the decision will be crystallised before the budget. The government has already announced a fund infusion of 22,915 crores, out of the 25,000 crores earmarked. Of this, 75% has already been released. The remaining amount will be linked to performance with particular reference to greater efficiency, growth of both deposits and credit in addition to the reduction in cost of operations.

3. PM MODI ANNOUNCES SOPS FOR MSMEs, RURAL INDIA AND HOUSING SECTOR: Prime Minister Shri Narendra Modi has announced new schemes for rural and urban housing, farmers, senior citizen and MSME sector. The Prime Minister has announced a 60 day waiver of interest on farm loans. Home loans up to Rs 2.00 lakhs, Rs 9.00 lakhs and Rs 12 Lakhs will now be eligible for interest relief of 3%, 4% and 3% respectively. The government has also waived interest on existing farm loans for the latest kharif and rabi crops. Under MSME the CGTSME coverage has been increased to Rs 2.00 crore from the existing 1.00 crore. Besides this, the cash credit limit for small businesses has been raised to 25% from 20%. The Senior citizens will now be eligible for 8% interest on their deposits up to 7.5 lakh for 10 years.

4. RBI IMPOSES RESTRICTIONS ON WITHDRAWAL FROM CERTAN ACCOUNTS: Tightening the noose around the people who misused banking channels to park their un-accounted money, the Reserve Bank of India has now imposed restrictions on withdrawal of more than 2.00 lakhs from bank accounts. Withdrawal/transfer will not be permitted without quoting PAN or submission of Form 60. These restrictions have come in effect after the misuse of Jan-Dhan and dormant accounts. As per RBI notification, withdrawal and transfer of funds (more than Rs 2.00 lakh) will not be permitted in account without quoting PAN or submission of Form 60.

5. SBI’S NEW HOME LOAN SCHEME—"HAMARA GHAR": In an effort to push home loans, SBI has floated a new scheme offering fixed rate for first two years at 8.50% for women and 8.55% for men. In this new schematic “Hamara Ghar“ housing loan, once the fixed tenure of two year ends, the interest rate will be linked to the prevailing one year Marginal Cost of Lending rate ( MCLR) with a normal spread over MCLR, which is 50 basis points.

6. TWO LARGE PSU BANKS MAY MERGE: The Centre may merge two large state-run banks in the coming financial year once a clean-up of bad assets is completed. Consolidation of India’s public sector Banks (PSBs) would be the final step of the government in rebuilding a financial system capable of underwriting credit growth and job creating investment in Asia’s third largest economy.

SNIPPETS - 31/12/2016

1. DEMONETIZATION IMPACT ON BANKS’ ASSET QUALITY WILL SHOW IN Q4: The asset quality problems for banks and finance institutions are rising as small customers are finding it very difficult with the adverse effect of demonetization on their business. But since RBI has given an additional 60 days’ time for borrowers to repay their dues, the banks have time to classify these assets as non-performing. Added to this, because of the demonetization work pressure, banks are unable to concentrate on recovery which will show its impact in the fourth quarter.

2. ONLINE LENDING FIRMS SEE HIGHER GROWTH: As Indian economy is taking a formal shift to cashless economy, lending companies who are engaged in online lending are seeing a huge potential to grow. Some online companies are rolling out plans for lending to restaurants and small traders against their sale through point-of-sale machines. Some of the online companies like Capital Float and LendingKart may double their business figures.

3. LINK FINANCIAL DATA OF CORPORATES TO DETERMINE CREDITWORTHINESS, SAYS CII: Confederation of Indian Industry (CII) has said that linking financial data and consolidating the existing data of small and medium enterprises and corporates can provide banks with the necessary information to assess creditworthiness of borrowers. It said it is possible to thread the said data accesses together for a well-connected digital infrastructure so as to enable banks to lend to credible borrowers and that too at a tailored interest rate.

4. PAY WITH YOUR AADHAAR CARD SOON: No card, No smartphone, No point-of-sale machine but if you have Aadhaar card and if the same is linked to your bank account then very soon you also can make payment. The use of Aadhaar-enabled payment system and opening up of Aadhaar database is on the verge of making it a reality. IDFC Bank and SBI have already introduced biometric readers at merchant outlets. There are 109 crore people enrolled with Aadhaar and hence this mode could be the most preferred mode of payment in future.

5. LOAN REPAYMENT WINDOW EXTENDED TO 90 DAYS BY RBI: In an effort to bring further relief to the people hit by demonetisation, the Reserve Bank of India gave borrowers another 30 days over and above 60 days for repayment of housing, car, farm and other loans up to Rs.1 crore.

6. CABINET MAY PASS AN ORDINANCE ON OLD NOTES: The government is all set to pass an ordinance to settle all issues regarding demonetization, extinguishing of the Reserve Bank of India’s liability in respect of the cancelled currency. The ordinance is likely to provide for a limited window to return cancelled currency in special cases only at RBI counters till March 31st 2017. But this will be enabled with stiff conditions and only for people who can give valid reasons for not being able to deposit the cancelled currency before 30th December 2016. An Ordinance for imposing heavy penalty has already been announced for possession of more than 10 notes of banned currency after 31/03/2017.

7. RBI WARNS BANKS ABOUT THE BENEFIT TO NBFCs FROM THE STRESS IN BANKING SECTOR : RBI is proposing to go ahead with a new bunch of Banks, such as Custodian and Wholesale Banks. Also it asked existing banks to rework their strategies, as Non Banking Finance Companies(NBFCs) are benefiting from the stress in banking sector.

SNIPPETS - 24/12/2016

1. LESS TAX FOR SMALL TRADERS ON DIGITAL TRANSACTIONS: With a drive to move the cashless economy in the country, the government has said that small traders and businesses with a turnover of up to 2 crores will pay less tax if they accept payments through banking and digital modes. Presently as per Income Tax Act, 1961 small business with a turnover of up to 2 crores or less, the profit is deemed to be 8% of the turnover for taxation.

2. PRADHAN MANTRI GARIB KALYAN YOJANA (PMGKY): PMGKY is a tax disclosure scheme floated by the government from December 17 and will be open till 31st March 2017. The new disclosure scheme comes with 50% tax including penalty. Further, declarations under the said scheme will be kept confidential and information will not be used for prosecution.

3. BANKS SET TO LIMIT ELECTRONIC FUND TRANSFER CHARGES: In another measure to boost cashless economy, the government has directed all state run banks not to charge fees for transactions settled on Immediate Payment Service ( IMPS) and Unified Payment Interface ( UPI) in excess of that levied for National Electronic Funds Transfer (NEFT) of over Rs 1,000/-. RBI has also directed banks not to charge for debit card transactions up to Rs 2,000/- . Both these directions will be in force till 31/03/2017.

4. BETTER IDEA FOR ELIMINATION OF BLACK MONEY: According to Mr Kaushik Ghosh, professor of Economics and ex-chief Economist -World Bank, Demonetization mostly hurts people who are not government’s intended targets and it only dents the corruption temporarily. But if the idea is to fully eliminate black money forever, then abolishing personal income tax is a better idea. Further elaborating his point of view he says that only 2 to 3 % of Indians are paying income tax and around 5% of Indians file tax returns. When there is no income tax deduction, people will have more spending power. And when there is no income tax to be paid people will freely declare their income. People will freely unlock their unproductive assets such as gold and real estate and convert to those instruments that generate annual return. This will lower our import bill and strengthen the rupee. Bank deposit will shoot up, bringing down interest rates. And then there is cost of compliance. Tax payer wastes his otherwise productive hours each year assembling supporting documents, meeting accountants, and devising ingenious ways of paying the tax. Since there is no tax, rich will not venture their funds to tax heaven countries and will keep the funds here in India which they will use for more productive purpose thereby paving way for economic growth. The government would lose an important source but this can be covered by plenty of other means. Finally eliminating Income tax would shut the sprawling I-T Department and its vast bureaucracy and the present income Tax work force can be utilised by the government for other productive purpose.

SNIPPETS - 17/12/2016

1. BILLIONAIRE PREM WATSA BUYS STAKE IN CATHOLIC SYRIAN BANK: Canadian billionaire Mr Prem Watsa’s Fairfax Financial Holdings has bought 51% stake in Kerala based private sector bank Catholic Syrian Bank Ltd in an unprecedented deal. This is a far reaching development for the banks who are desperately looking for capital to meet Basel III norms.

2. CASH DELIVERY- RBI CUTS PROCESS TIME: The Reserve Bank of India has decided to ease the process related to transfer of currency notes to banks by start of the day itself. At present it is nearly by the afternoon that the transfer of currency to banks is affected. Following the criticism of mismanagement, the RBI has decided to transfer currency by 9 am every day. This may ease the pressure faced by bankers.

3. BANK CREDIT PLUNGES BY 61,000 CRORE IN POST DEMONETIZATION PHASE : Because of the demonetization after effects, the bank credit has shrunk by a vast margin of Rs 61,000 crore. Percentage wise it amounts to 0.8% . But at the same time the banks have been benefitted as many borrowers, including some default accounts have paid back.

4. RAIDS BY I-T DEPT AT BRANCHES IMPACTING STAFF MORALE: Added to the stress levels due to the long hours of working since demonetization, fear of raids by I-T Dept has added to stress for banking staff. Respective bank managements are taking serious steps to keep the morale up. These steps include reaching out to the bank employees manning the front desks and cash, and creating Whartsapp groups to spread awareness about unscrupulous operators and point out the risks involved.

5. RBI’s SMALL STEP TOWARDS e-KYC IS A GIANT LEAP TOWARDS DIGITISING FINANCE: The Reserve Bank of India has now allowed the opening of deposit and borrower accounts through OTP e-KYC. This small step by RBI is a giant step towards digitising banking in India. It will help the Financial Inclusion drive in a big way as it will bring in potentially millions of unbanked Indians under ambit of formal banking. The traditional KYC process by way of submitting certain documents is more time consuming and expensive. However, e-KYC through OTP is instant and happens in real time which will be paperless.

6. SOON IT WILL BE NO CHEQUES WITHOUT AADHAAR DETAILS: Banks may make it mandatory for customers to mention the recipient’s Aadhaar details while carrying out cheque transactions. This move resonates with the Central governments’ plan to link all bank transactions with Aadhaar card. Since Aadhaar card stores demographic and biometric information of the card holder, Aadhaar linked Unified Payment Interface (UPI) will enable an individual to carry transactions using a single platform.

7. REASONS FOR CASH CRUNCH IN THE MARKET: Even after 38 days of demonetization, the cash crunch doesn’t seem to be easing out. Hoarding of bulk new currency by some by some influential people across the country may be one of the reasons. However, hoarding may not be the only reason for the cash crunch. The other reason is that two of the government mints responsible for printing currency notes do not seem to be capable of printing so much money on short notice. But as per the latest reports the condition will improve in a few days.

SNIPPETS - 10/12/2016

1.RBI LIFTS INCREMENTAL CRR BURDEN ON BANKS: The Reserve Bank of India (RBI) has announced that the incremental 100% Cash Reserve Ratio ( CRR) requirement imposed on banks on November 26th will be withdrawn, effective from 10th December 2016. This additional CRR was for the deposits received between September 16th and November 11th. This was over and above the 4% CRR that banks already maintain with RBI. The additional CRR had been put in place to absorb excess liquidity which the banks have received by way of demonetization.

2. COMMON “QR” CODE SOON FOR PAYMENTS: As a part of multi-pronged push towards cashless economy, the government has asked RuPay, MasterCard and Visa to have a common “Quick Response” (QR) code based payment solution which will help merchants across India to accept payments without a card or swipe machine. This will be in line with the mode used by PAYTM now. A merchant will display his QR code, which the buyer scans through his smartphone app and can make payment using any of the three networks- RuPay, MasterCard or Visa.

3. PAYTM TO START PAYMENT BANK SOON: Paytm has got an in-principle approval from RBI for launching a payments bank. For this Paytm is transferring its wallet business into a newly created entity which is mandatory step to fulfil the rules laid by RBI. The wallet business is being transferred to the newly incorporated Paytm Payments Bank Ltd (PPBL). The transfer will be complete once the payment bank license is obtained.

4. AMAZON STARTS A NEW LAUNCHPAD PLATFORM TO HELP INDIAN START-UPS: Amazon.in, the Indian arm of Amazon.com has launched Amazon Launchpad in India to help Indian Start-ups to gain access to global markets. Amazon will lend its delivery and advertisement services to these start-ups and features their products on a dedicated store under the programme. Amazon charges Rs 5,000/- per merchant per month for the said services.

5. BAD LOANS CAUSE COLLATERAL DAMAGE AMID CASH CRUNCH: Banks are so busy to cope with cash crunch caused by demonetization that the critical task of following and going after bad loans has lost its track in banks. Not only that, bankers are worried that due to the demonetization there is a practical slump in asset value which means that the collateral value is depreciating making things worse.

6. EXCISE DUTY EXEMPTION FOR POS DEVICES: In yet another move to push the Indian economy towards digital economy, the government has provided excise duty exemption on point-of-sale (POS) devices manufactured in India. The excise duty exemption is also extended to all raw materials used for manufacture of POS machines. However, this exemption will be available only till 31st march 2017.

7. GOVERNMENT UNVEILS SPECIAL BONDS TO FREEZE DEMONETIZATION FUNDS: The government has created provisions to issue special bonds worth Rs 6.00 lakh crore to absorb the temporary flow of surplus funds with banks created due to demonetization. These bonds are called Market Stabilisation Scheme Bonds (MSS) and RBI will sell these bonds to banks on behalf of the government. Money raised by these bonds cannot be used by the government and does not add to fiscal deficit.

SNIPPETS - 03/12/2016

1. PRACTICAL (POSITIVE) ASPECTS OF DEMONETIZATION: We are herewith highlighting some of the true facts which have a positive effect on the economy as a whole due to demonetization. Though this may sound a bit crude but these are the real facts:

A) TRADERS/BUSINESSMEN GOT THEIR LONG OVERDUES BACK: Many a businessmen who had lost long lost hopes of recovering their long overdue amount were in for a surprise as many of them have received back their dues in the form of old currency notes.

B) MANY A TRADERS COULD SELL THEIR OLD STOCK OF PRODUCTS: Traders who were hoarding their old stock of products could dispose them in exchange of old currency notes.

C) WORKERS GOT UP TO 6 MONTHS ADVANCE SALARY: The rich class who were hoarding black money, in a hurry to dispose the old notes have given hefty advance salaries ( up to 6 months also in some cases) to their staff like factory and office workers, servants, drivers etc. This is a big boost to these poor people.

D) POOR JAN DHAN ACCOUNT HOLDERS HAVE BEEN BENEFITTED: The rich class who were hoarding black money have found a new way to deposit their ill wealth by convincing the poor to deposit their money into their respective Jan Dhan accounts, of course may be for a monetary benefit. And this is the main reason why these Jan Dhan accounts are flush with funds now as reported by the media.

E) MUNCIPAL CORPORATIONS RECEIVED THEIR LONG PENDING DUES OF PROPERY TAX: Respective Municipal Corporations of various cities have been benefitted as they have received the long outstanding dues of property tax. People who were reluctant or deliberately not remitting their property tax to the corporations have remitted all the arrears by making payment in old currency notes.

F) LOCAL POLITICIANS HAVE DISBURSED INTEREST FREE LOANS: Local politicians in some of the rural areas across the country have disbursed interest free loans to the local people in the form of old currency notes, as reported by media.

G) BENEFITS TO LOW PROFILE YOUTH, IN EXCHANGE OF OLD CURRENCY: Many affluent businessman have utilised the services of low profile youth for exchanging old currency in various banks, of course for a monetary benefit to these youths.

2. GOVERNEMENT WILL LEVY 50% TAX ON UNEXPLAINED DEPOSITS: Unaccounted deposits made in old currencies up to 30th December 2016 will attract 50% income tax and a lock-in period of 4 years –IF IT IS DECLARED TO THE INCOME TAX DEPARTMENT. After levying tax at 50%, the half of remaining deposit (25% of the original deposit), will not be allowed to be withdrawn for four years & will not fetch any interest. But undisclosed money detected in bank accounts could attract a penalty up to 90% and a longer lock-in period.

3. DEMONETIZATION COULD HIT THE BANKS’ PROFITS FOR THE THIRD QUARTER: Due to the factors linked to the demonetization of high currency notes, the banks’ profits for the third quarter of this fiscal could take a serious hit. The reasons include the requirement that banks need to park 100% of their incremental deposits, under CRR temporarily with the RBI at zero % interest rate, slowdown in loan growth due to resources getting diverted for the on-going demonetization exercise, and operational expenses incurred in recalibrating the ATMs.

SNIPPETS - 26/11/2016

1. POST –DEMONETIZATION EFFECTS:

A) PAN REQUIRED IF COMBINED CASH DEPOSITS EXCEED Rs.2.5 LAKHS TILL DECEMBER 3Oth : The limit for cash deposit in an account is less than Rs.50000/- per transaction per day without PAN card. But now the government has announced that cash deposits made between 8th November to 30th December will require PAN proof if the combined deposits cross Rs.2.5 lakhs.

B) SUSPECT CASH DEPOSITS WILL ATTRACT IMPRISONMENT: The I-T department has warned people that if it is found that they are depositing their unaccounted money in someone else’s account, they will be charged under the Benami Transactions Act that carries penalty, prosecution and rigorous jail term.

C) RBI GIVES BORROWERS 60 MORE DAYS TO REPAY LOANS: The reserve Bank of India has allowed banks, District cooperative banks and NBFCs to retain “Standard” asset classification on loans up to 1 crore for another 60 days from the date it would have turned non-performing(NPA).

D) RBI SETS STIFF RIDERS FOR Rs.2.5 LAKH WITHDRAWALS FOR WEDDINGS: The RBI has permitted banks to allow withdrawals up to 2.50 lakhs for wedding purpose but with stiff riders. It says the money can be withdrawn only from the credit balance prevailing in the account before 8th November. Further it states that such cash withdrawals should be used only to make payments to those who do not have any bank account and names of such recipients should be mentioned at the time of withdrawal.

E) RBI BALANCE SHEET MAY TAKE A HIT: All the banks are parking their accumulated cash with the RBI and this will have a negative impact on RBI balance sheet. RBI is already strained at meeting the pressure of supplying fresh notes to banks. RBI could be running out of enough securities to offer to banks against heavy cash deposits and experts say that the RBI now urgently needs policy measures to protect the financial stability of its books.

F) MUTUAL FUNDS EXPECT HUGE INFLOWS FROM RETAIL INVESTORS: Due to the demonetization which will ease inflation, and which has already resulted in reduction in bank deposit interest rate, the Mutual Fund industry is preparing for a huge inflow of funds as it may lead to investors to tap investment avenues like mutual funds.

G) FOREX SALE DECREASES OVER 50%: Demonetization has led to an overall downslide in average overall forex sales following a sharp crunch of foreign currency supply in the market.

2 AIRTEL LAUNCHES INDIA’S FIRST PAYMENTS BANK: Airtel has rolled out India’s first payments bank from Rajasthan. After getting its licence from RBI, Airtel has entered into an MOU with Kotak Mahindra Bank. Airtel is offering 7.25% interest on savings bank accounts. The account will be fully digital and paperless. It will not issue any ATM/debit cards to its account holder but will allow cash withdrawals from its designated Airtel retail outlets. Customers with an Airtel mobile connection will have the mobile number as their account number.

BLOG - EFFECTS OF DEMONETIZATION OF CURRENCY

AFTER EFFECTS OF DEMONETIZATION OF CURRENCY: The Indian Economy as a whole has reacted sharply to the recent demonetization decision of Government to withdraw Rs.1,000 and 500 currency notes from the market. Some of the points which are of much importance are being emphasised here:

A) WINDFALL GAIN FOR RBI: Demonetization will bring windfall gains to Reserve Bank of India (RBI) as it will reduce RBI’s liabilities, to the extent that the old notes do not come back into the system. RBI could gain as much as Rs.6 lakh crores, assuming that even less than half of the notes valued at Rs.15 lakh crores do not get re-deposited in the banking system.

B) RBI WAIVES CHARGES ON ATM TRANSACTIONS:The Reserve Bank of India has instructed all banks to waive ATM transaction charges (both financial and non-financial charges). This waiver will be effective till 30 th December, 2016, subject to further review.

C) REDUCTION IN INTEREST RATES FOR BOTH DEPOSITS AND LOANS: Because of currency demonetization all the banks will be flush with huge liquidity and this will force them to reduce interest rates for both deposits and advances (loans). This has been already implemented by some banks, as SBI has brought down its bulk deposit rate to 6.95%, Axis Bank has reduced its Marginal cost of lending rate ( MCLR) by 20 basis points .

D) BANK LOAN – DISBURSAL AND REPAYMENTS TO TAKE A HIT:Demonetization will hit the business of banks in the third quarter of the fiscal. The impact is due to both the internal and external factors. Internally, banks are unable to start their normal business operations such as processing of loans. They are unable to keep a watch on their recovery aspects as well. Externally, due to the slowdown in the business many borrowers will not be in a position to repay their loans in time.

PENALTY LIKELY ON UNEXPLAINED HIGH DEPOSITS EVEN BEFORE FILING IT RETURNS: The I-T Department may slap a hefty 200% penalty on unexplained high cash deposits in banks even before annual income tax returns are filed so as to prevent black money being converted to white. It is also collecting data on spurt in deposits in zero-balance Jan-Dhan accounts and will slap 200% penalty on unexplained high value cash deposits.

F) YOU CAN WITHDRAW MONEY NOW AT PETROL PUMPS: With as many as 50% ATMs’ across the country not operationalized yet, the government has permitted the state run petrol stations to disburse cash by swiping your debit card. This is done to normalise the panic situation in the country. Presently around 2,500 Petrol stations where State Bank of India swipe machines are used are enabled with this facility and within two-three days around 20,000 more petrol stations will be enabled where swipe machines of HDFC Bank, ICICI bank and Citibank are being used. One can withdraw Rs.2,000/- per day at these petrol stations by swiping his/her debit card.

G) SHORT TERM DEFLATIONARY TREND IN THE ECONOMY: Initially the economy as a whole will suffer adversely as most of the trade/industry will be slowed down. This is because of the diminishing trend in the currency circulation, there by lack of purchasing power with the general public. But this deflationary trend is temporary and will only last for a few months. Once the money circulation becomes normal the trade and industry will pick up.

SNIPPETS – 12/11/2016

1. GOVERNMENT WITHDRAWS Rs 500, Rs 1,000 NOTES TO FIGHT BLACK MONEY AND FAKE CURRENCY MENACE: In an Extraordinary and Historical move, Honourable Prime Minister Shri Narendra Modi withdraws the circulation of Rs 500/- and Rs 1,000/- currency notes from midnight of 8th November 2016. We have already covered the details in our separate BLOG- IMPACT OF DEMONETIZATION OF CURRENCY IN INDIA.

2. MULTIPLE TAX SLAB & CESS TO COMPLICATE GST: While the Indian trade, commerce and Industry is getting ready for the “GST”( Goods and Service Tax) regime, Industry experts say that multiple tax slabs coupled with the cess will complicate the GST. The GST council has almost finalised the four-tiered rate structure of GST—5%, 12%, 18% and 28%. And cess on demerit items like tobacco, pan masala, luxury cars, aerated drinks etc. The 28% slab will be mostly on majority of consumer durable sector. The cess is to compensate states for a possible revenue loss.

3. SBI 2nd QUARTER PROFIT PLUNGES 99.6% ON HIGHER BAD LOAN PROVISIONING: State Bank of India recorded 99.6% dip in consolidated net profit at 20.70 crore for September 2016 quarter on account of 3-fold jump in bad loan provisioning. Its profit was Rs 4991.70 crore during the same quarter of the last financial year.

4. NEW NOTES WILL NOT HAVE “TRACKING CHIPS”: With introduction of new Rs 2,000 and Rs 500 notes, reports were abuzz with rumours that the new notes will have “nano GPS tracking chips” embedded in them which will enable tracking. Now Reserve Bank of India has denied the same saying there is no such thing in the notes and is just a rumour and there is no reality in it.

5. NEW Rs 1,000 NOTES WITH EXTRA SECURITY FEATURES IN A FEW MONTHS: Government will re-introduce Rs 1,000 bank notes in a few months along with new series of lower denomination notes with enhanced security features.

6. RBI ASKS BANKS TO CHANGE DEBIT CARDS WITH MAGNETIC STRIPS: Considering the on-going chaos over debit card breach, the Reserve Bank of India has asked all the banks to change their magnetic strip based debit cards with “chip based” cards. Banking experts claim that chip-based cards are comparatively more secure than magnetic strip cards. The chips are more secure and are difficult to hack. However these chip-based cards are in the premium category and involve more cost. But looking at the security aspects, many banks will start issuing chip-based cards soon to all its customers.

7. INDIA’S FIRST BANKING ROBOT- “LAKSHMI” MAKES ITS DEBUT IN TAMILNADU : Endearing, interactive and superfast with data, india’s first banking robot LAKSHMI made her debut in Chennai, launched by City Union Bank. ROBOT LAKSHMI will be the first onsite bank helper.

BLOG - IMPACT OF DEMONITIZATION

1. GOVERNMENT WITHDRAWS Rs 500, Rs 1000 NOTES TO FIGHT BLACK MONEY AND FAKE CURRENCY MENACE:
In an Extraordinary and Historical move, Honourable Prime Minister Shri Narendra Modi withdraws the circulation of Rs.500/- and Rs.1,000/- currency notes from midnight of 8th November 2016. The driving force behind the historical decision was to eradicate black money and fake currency menace.

2. HOW WILL THE Rs.500 AND Rs.1,000 NOTE BAN IMPACT OUR BUSINESS AND ECONOMY :
A) BLACK MONEY HOARDERS: A recent study had pegged India’s black market economy at over Rs.30 lakh crore, which is about 20% of total GDP. By banning the Rs.500/- and 1000/- currency, black money hoarders will have a tough time. They either have to route this money through bank which will attract heavy penalty or they have to burn the stashed cash.

B) FAKE NOTE CIRCULATION:India is facing the fake money menace and fake currency infiltration in the country by the terrorists. Hence by withdrawing the circulation of this currency and introducing new currency is a big blow to these groups. This is nothing less than a kind of “Super Surgical Strike” on these groups.

C) IMPACT ON RURAL ECONOMY: A strong criticism of the scheme that came across is the possible negative impact on rural economy. India has more than 6.8 lakh villages and most of these village population does not have any banking facility. This is likely to come across as a huge shock for such sections of our population. It will be long before the entire rural India moves towards cashless economy.

D) DOMESTIC/HOUSEHOLD SECTOR: Domestic and household sector or rather the middle income group is going to suffer a lot because of this currency ban as they would face lot of inconvenience. But this is just for a few days and once the new currency is issued and lower denomination currency circulation comes to normal there will be relief.

E) BANK DEPOSITS WILL SPIKE: Banks are expected to witness a surge in deposits. The banks’ low cost deposit will be on the rise immediately. Banks will see huge rise in their term deposits as well and banks will have more liquidity. This will result in fall of interest rates.

F) IMPACT ON JEWELLARY AND REAL ESTATE BUSINESS: The Decision of the government is widely welcomed by the jewellery industry all over the country. The general opinion is that Gold will be in vast demand as people will have more faith in gold than currency. It will indeed create destabilisation for a while, but overall it is expected to benefit the industry. In the real estate sector the unorganised and secondary (resale) property market would be adversely impacted. According to this sector, the Housing prices would witness a drastic downfall, which will in turn help to revive the low demand in this sluggish market.

G) IMPACT ON CAPITAL MARKET: With initial day of slump in the market, the market is seeing an upward trend from the next day. The capital market will be bullish in the near future as investors expect the Bank Deposit rates to fall, and thereby they will start investing in equities.

H) TILT TOWARDS CASHLESS ECONOMY:Due to the currency ban the government has fixed new limits on the ATM withdrawals at Rs.2,000/- per day, withdrawals from bank accounts to Rs.10,000/- per day. Perhaps the government is trying this on a pilot basis and if the situation stabilises then it will drive the card payments across the country, there by paving the way for a “Cashless Economy—card transactions replacing cash transactions

SNIPPETS - 05/11/2016

1. RBI WANTS 10% OF BANK ATMs TO DISPENSE ONLY Rs 100/- NOTES: Reserve Bank of India has said that it will conduct a pilot project wherein 10% of ATMs in the country will exclusively be made to dispense only Rs 100/- banknotes. This is undertaken to address the genuine requirements of members of the public.

2. BANK TO REPORT FRAUDS OF Rs 1 CRORE AND ABOVE TO CVC: With several High-ticket alleged frauds coming to the fore, Central Vigilance Commission ( CVC) has now made it mandatory for public sector banks to report to it, all such matters involving funds over Rs one crore. For this purpose CVC has hired four General Manager ranked officers from banks as advisors, who will recommend whether CBI probe can be further initiated or not.

3. AXIS BANK ENABLES SUBMISSION OF YOUR 15 G/H THROUGH MOBILE: Axis bank has launched “Insta Services” to enable electronic submission of Form 15 G/H through its mobile application. With this, their customers need not visit the branches to submit these forms and can submit the forms at ease from their homes. Form 15 G/H are self-declaration forms required to be furnished by the assesse to the bank for “nil” deduction of TDS (Tax Deduction at Source) on interest income. Form 15G is for everyone and Form 15H is for senior citizen.

4. E&Y (ERNST & YOUNG) SAYS RURAL INDIA CAN GET FINANCIAL COVER VIA MOBILE SERVICES : London based professional service firm E&Y says that there is a large untapped Indian rural population waiting to be covered under the financial net and this can be made possible through mobile based services. Initiatives such as Jan Dhan Yozana that led to the opening of 125 million new bank accounts indicate the appetite of financial services in the country. According to its survey, there is still a large (nearly 47%) untapped population to be covered under the financial net.

5. 57 BORROWERS OWE BANKS WHOPPING Rs 85,000 CRORES: Only 57 borrowers have defaulted on banks worth whopping Rs 85,000 crores. The Supreme Court (SC) said this after perusing a report submitted by RBI about persons who have taken loan worth Rs 500 crores and above and defaulted. The SC asked the central Bank as to why their names should not be made public. The SC bench also remarked that if the bar was lowered below 500/- crores, then the amount would cross over Rs one lakh crore.

6. WHAT HAPPENS TO YOUR MONEY WHEN YOU LOSE MONEY AFTER A DATA BREACH: Indian Banks carried out the country’s biggest card replacement move after a massive data breach that had its source in China. While this has been a proactive measure to protect the interest of the customer, there are a few things one must be aware. If a customer loses money due to the data breach then according to a draft issued by RBI, the concerned bank is responsible for the same and the bank should credit the amount involved in the unauthorised electronic transaction to the customer’s account within 10 working days.

SNIPPETS - 29/10/2016

1. RBI TO AUDIT CYBER SECURITY AT BANKS: In view of the latest financial data leakage that has happened recently, RBI is looking to take matters in its own hands and scrutinise security of banks. For that RBI is looking to rope in outside help that would try and exploit the loopholes in the information technology system of the banks so as to rule out repeated breaches in future. This would be a kind of IT (Information Technology) audit which directly deal with the loopholes in IT system of banks.

2. BANKS TOLD TO ADHERE TO CYBER NORMS: Indian Banks were recently stung by the biggest financial data breach to hit the banking industry as a result of which the banks were forced to compromise as many as 3.2 million debit cards. As a result of this, Reserve Bank of India has directed banks to strictly adhere to the cyber security norms and guidelines issued in June 2016. Banks have been advised to review the extant cyber security arrangements.

3. HUNDREDS OF SMALL NBFCs FACE CLOSURE THREAT ON TIGHTER RATING NORMS: Nearly 200 Non-Banking Financial Companies (NBFCs) face closure in the next few months as they don’t meet the Reserve Bank of India’s mandated requirement of minimum investment grade credit rating to accept deposits. These companies which are mainly localised small time lenders have now approached the regulator seeking relaxation in the said norms.

4. BSE INTRODUCES PAPERLESS “SIP” FACILITY FOR MUTUAL FUND INVESTORS: The BSE has introduced paperless “SIP”( Systematic Investment Plan) facility to mutual fund investors. This move will drastically cut the registration time and allow subscribers to transact through different payment modes including Net Banking.

5. BANKS MAY ACQUIRE CORE SECTOR ASSETS: The government has decided to encourage state run banks to acquire assets of loan defaulters in steel, power and shipping sectors. State run banks will manage these companies. This will necessarily involve the banks to invoke power under the contract, converting part of their debt into equity, taking control of those units and appointing a management team of established people to manage these units.

6. BANKS MOVE TO LOWER CREDIT CARD EXPOSURE: Banks are slowing their exposure to their credit cards business amid fears that they may be fuelling growth in a segment that may come under pressure due to slowing pay rises and uncertainties over jobs.

SNIPPETS - 22/10/2016

1. RBI EASES NORMS FOR FOREIGN INVESTMENT IN START-UPS: The Reserve Bank of India has now permitted Foreign Venture Capital Investors ( FVCIs) to invest in Indian start-ups without any prior approval. SEBI registered FVCIs have also been permitted to invest in un-listed firms without any prior permission from RBI. They do not require any prior approval and can invest in equity or equity linked instruments or debt instruments issued by Indian start-ups.

2. RBI PERMITS 100% FDI IN MORE FINANCIAL SERVICES: The Reserve Bank of India has permitted 100% Foreign Direct Investment (FDI) in “Other Financial Services” carried out by NBFCs under automatic route. The “Other Financial Services“ will include activities which are regulated by any financial sector regulator like RBI, SEBI, Insurance Regulatory, Pension Fund Regulatory etc. Such foreign Investment will be subject to certain conditions like minimum capitalization norms.

3. SBI BLOCKS OVER 6 LAKHS DEBIT CARDS ON SECURITY BREACH FEAR: Sate bank of India has said that it has blocked and will replace 6,25,000 debit cards fearing data/security breach. SBI said it will compensate its customers in case of lapses. On getting information from VISA/MASATERCARD and RUPAY, as a measure of precaution, they have decided to replace these cards.

4. PSU BANKS ASKED TO REFER HIGH-VALUE BAD LOAN RESOLUTION CASES TO OVERSEEING PANEL: The Finance Ministry has asked public sector banks to approach the newly formulated Over Seeing Committee ( OC) for resolution of all High-value bad loans and not just accounts considered under Scheme for Sustainable Structuring of Stressed Assets ( S4A). The Over Seeing Committee (OC) is a two member committee which includes former SBI Chairman Mr. Janki Ballabh and former chief vigilance commissioner Mr. Pradeep Kumar which is set up by Indian Banks’ Association in consultation with RBI and vigilance and investigating agencies.

5. MERGERS ARE NOT QUICK FIX SOLUTIONS FOR BANKING SECTOR: As per the report of The Associated Chambers of Commerce and Industry of India (Assocham), an Industry body, it says the government should focus on making banking system more stronger and give the lenders independence to find their own solutions instead of stressing on mergers. Assocham President Mr. Sunil Kanoria while releasing the report said that mergers and consolidation of public sector banks is certainly no answer to the present crisis, which can only be resolved by professionalising these banks with the government keeping an arm’s length.

SNIPPETS - 15/10/2016

1. TOTAL BANK DEPOSITS CROSS Rs 100 LAKH CRORE FOR THE FIRST TIME: India’s banking system reported total deposit of Rs 100.00 lakh crores for the first time ever in September 2016. This is as per the data released by RBI. With demand deposits crossing Rs 10 lakh crores and time deposits crossing Rs 90 lakh crores. The month of September saw the highest ever monthly rise of 5.32 lakh crores. Although 100 lakh crores is a big milestone, historical data reveal that the deposit growth has slowed down considerably in the last five years. While banks’ deposit grew at a CAGR of 12.88% in the previous five years, it had grown at a CAGR of 19.9% in the previous five years.

2. PSBs LOSSES MAY HAMPER ABILITY TO PAY INTEREST ON BONDS: As per CRISIL Rating’s report, a sharp decline in profitability and mounting losses of some of the Public Sector Banks could wipe out their revenue reserves and hamper their ability to pay interest on bonds issued to meet Basel III norms. While the government has committed capital infusion to PSBs, the coupon on AT1 bonds can only be serviced through current year’s profit or from revenue reserves and hence any capital infusion by government alone cannot improve the banks’ ability to service coupon ( interest) on the bonds.

3. GOVERNEMENT PLANNING MERGER OF TWO BIG PSU BANKS AFTER DEBT CLEAN-UP: Government of India is planning and may merge two big banks in the coming fiscal once the clean-up of bad asserts is completed. Consolidation of India’s public sector banks would represent a final step in rebuilding a strong financial system capable of underwriting credit growth and more job creating investment.

4. FIRST HALF FINANCIAL STATEMENTS (H1) TO BE SUBMITTED BY BANKS TO RBI BY NOVEMBER 30TH: The Reserve Bank of India has asked banks to submit the first- cut reporting of their financial statements for the first half of the fiscal ending September 30 with regard to Indian Accounting Standards by November 30th. This will help RBI to ascertain the difficulties faced by these banks as part of the transition to the International Financial Reporting Standards from April 2018.

5. RBI CHIEF WARNS OF RISKS FROM BREXIT AND U.S. ELECTIONS: Reserve Bank of India Governor Mr. Urjit Patel has warned India and fellow BRICS countries( Brazil, Russia, India, China and South Africa) to be prepared to confront potential “political risk” events such as Britain’s exit from European Union and U.S. Elections. Mr. Patel said that India has already moved in this regard to improve its defences, through measurable progress in price stability, fiscal rectitude and sustainable current accounts. He further added that government initiatives such as ‘’Make in India” intended to turn it into a manufacturing hub.

SNIPPETS - 08/10/2016

1. RBI LOWERS BENCHMARK REPO RATE BY 25 BPS TO 6.25%: Reserve Bank of India has cut the interest rates by quarter points and now the new repo rate would be 6.25%, which is the lowest in 6 years. With this, Mr Urjit Patel the new RBI Governor, by dropping the interest rate to a near six year low, appears to be making way for a different way of doing things despite the inflation forecast for financial year 2016 nudging over the target.

2. NEW GUIDELINES ON STRESSED ASSETS : Indian Banks which are burdened by bad loans are likely to get a breather in the way they classify restructured stressed loans, opening up the possibility of more bailouts for the ailing companies. RBI has said that banks need not classify the sustainable part of restructured loans as bad. The relaxation in the said guidelines will help most banks and will be a relief for the banking system.

3. FINETECH STARTUPS TO GRAB BUSINESS FROM FINANCIAL INSTITUTIONS AND BANKS: Finetech startup companies are rolling up their sleeves to get share in the financial market. As consumption is picking up, the banks are struggling to keep up with the growing market and then NBFCs are still slow to learn the ways of online business, these Finetech startups are grooming up day by day. A few companies are plugging the e-commerce sites directly to provide consumers with easy EMI options, others are trying the personal loan segment by filling their wallets before they go out for shopping.

4. DELINQUENCIES IN LAP (LOANS AGAINST PROPERTY) MAY RISE, NBFCs MAY HAVE MORE STRESS: Delinquencies in LAP portfolio of financial institutions is likely to rise to over 5% over the next four quarters. This is due to stagnant property prices and risk aversion. More than the banks, NBFCs will have more stress as out of the total LAP portfolio of Rs 2.5 lakh crores for the entire financial sector, about 1.2 lakh crores is estimated to be on the books of NBFCs.

5. BANKS MAY DELAY IFRS IMPLEMENTATION ON ACCOUNT OF CAPITAL WORRIES: Reporting agency Fitch has said that migrating to the International Financial Reporting Standards (IFRS) format is likely to be delayed in the domestic banking sector as banks are finding it difficult to meet Basel III requirement. Basel III capital requirements are to be met by Indian banks by end of March 2019.

SNIPPETS - 01/10/2016

BANKS CAN’T PUBLISH DEFAULTERS PHOTO RANDOMLY: Reserve Bank of India has said that Banks can publish photographs of only those borrowers in newspapers who have been declared “Wilful Defaulters “as per central Bank’s guidelines. It directed the Banks to formulate a policy in this regard and the policy should clearly set out the criteria based on which the decision to publish photographs of the defaulters is taken.

2. PSBs ASKED TO USE “NEIN” DATABASE TO CHECK ANTECEDENTS OF ECONOMIC OFFENDERS: Public Sector Banks (PSBs) have been asked to use the National Economic Intelligence Network (NEIN) database to check the antecedents of borrowers and inform the authorities about the financial irregularities. Intelligence agencies have asked the banks to submit the information in a standard format. With this, promoters with questionable financial track record may find it very difficult to get credit from PSBs. This is a part of a strategy to prevent bad loans from piling up.

3. NPAs TO DIP ON HIGH INDUSTRIAL CAPACITY UTILISATION: SBI Chairperson Ms Arundhati Bhattacharya has said that the stressed assets level in the banking sector will come down once the key industrial sectors start functioning at their optimum capacity. Presently most of the industrial sectors are working at 60 to 65% of their capacity and once this is accelerated to 80 to 85%, we will see NPAs coming down as the demand comes back in the economy and will see more and more capital utilisation.

4. LENDERS TO GAUGE BORROWERS INTENT TO PAY, NOT JUST ABILITY TO PAY: So far banks and finance companies have factored borrower’s ability to pay the loan rather than his intent to pay. Borrowers may no longer be judged solely on the ability to repay the loan, their intent to repay too may become a critical parameter to avail loan. A number of finance companies have tied up with consulting firms which specialise in psychometric testing in lending that gauges the borrower’s creditworthiness on the basis of their intent to repay, instead of their ability. This issue has gained importance after the Vijay Mallya’s King Fisher loan fiasco.

5. ELEVEN INDIAN BANKS RISK BREACHING BASEL III CAPITAL TRIGGERS: As per the rating agency Fitch, Eleven of India’s Banks will likely be in danger of breaching Basel III capital triggers. The agency had estimated that India’s banks will need $90 billion in new capital to comply with Basel III banking norms which are due to fully kick in by March 2019. State run banks accounted for 80% of that amount.

6. BLACK MONEY: I-T RAIDS INCREASE THREE FOLDS: In the backdrop of the lack lustre results in the Centre’s Income–Disclosure Scheme (IDS) which has not yielded desired results so far, the government has started building pressure across the country by increasing the number of income tax raids, which have gone up by three times in the first four months of this financial year.

SNIPPETS - 24/09/2016

1. GOVERNMENT APPOINTS MONETARY POLICY COMMITTEE TO HELP RBI SET INTEREST RATES: The government appointed three members in the Monetary Policy Committee (MPC), putting the seal on India’s new architecture for setting interest rates and ending the Reserve Bank of India governor’s role as sole arbitrator. The three members will be joined by three Reserve Bank members, with Governor of RBI having a casting vote. Its first policy review is slated to be held on October 4th.

2. CABINET CLEARS MERGER OF RAILWAYS AND UNION BUDGETS: In a sweeping change of India’s annual budget process, the government ended the 92 years old practice of having a separate rail budget. The union cabinet has decided that from the coming year the rail budget and the general budget will be amalgamated. The Union cabinet also approved the finance ministry’s proposal to advance the general budget’s presentation by a month.

3. INDIA LESS PRONE TO BANKING CRISIS RISKS: According to Bank for International Settlements (BIS) India is less vulnerable to banking distress among the major economies while neighbouring China faces higher risks. As per data compiled by BIS of more than 40 economies show that credit-to-GDP gap was among the least for India.

4. SEBI WANTS RATING AGENCIES TO MAKE FULL DISCLOSURE: SEBI is asking credit rating agencies to come out with a slew of disclosures while doing corporate ratings and fix accountability in view of the recent surge in corporate indebtedness. Now the rating agency will have to spell out how the rating is conducted, responsibilities of the analysts, and evaluate the performance of their respective rating committees, particularly if there is an unforeseen default.

5. RBI PLANS FUND TO PUSH CARD SWIPE MACHINES: Reserve Bank of India is planning to create a fund to push card swiping machines. Concerned over low use of debit cards in electronic payments, the RBI wants banks those who are not installing card accepting machines to contribute to this fund that will subsidise installation of point of sales (PoS) terminals. There are 68 crores debit cards in India. But the number of PoS machines is only 14 lakh. The average debit card use at PoS machines is one transaction for every 10 transactions in an ATM.

6. RBI SAYS BANKS MUST REPORT ALL CYBER CRIMES: The Reserve Bank of India has issued an ultimatum to Indian banks on cyber crimes, asking them to immediately report any breach of security so that the overall network is not compromised. Some banks are reluctant to report such frauds in order to avoid negative publicity. RBI has set an deadline of March 31st 2017, for banks to put in place a mechanism to report cyber-crimes immediately.

SNIPPETS - 17/09/2016

1. BASEL-III NORMS MAY RESULT IN HALF OF INDIAN BANKS BRAECH CAPITAL TRIGGERS: Increased capital requirement under Basel-III norms may result in half the Indian banks breaching the trigger levels. This is as per the report released by credit rating agency- Fitch. With poor existing capital buffers and weak prospects for raising capital through market channel, the state run banks are more at risk.

2. CBDT TO HONOUR HONEST TAX PAYERS: The Central Board of Direct taxes (CBDT) will soon honour lakhs of “honest and compliant“ tax payers who have paid their tax dues diligently over the years. CBDT has created four broad categories of tax payers for the purpose: Large, Regular, Compliant and Diligent tax payers. Such people will be issued commendation certificates by policy making body of the IT department signed by CBDT Chairman.

3. PSBs CANNOT SELL PERPETUAL BONDS TO RETAIL INVESTORS: Public Sector Banks (PSBs) will not be able to sell perpetual bonds to its retail customers. The Securities & Exchange Board of India (SEBI) has struck down requests of PSBs to sell these securities to smaller investors, siting potential risks of mis-selling.

4. CRITERIA REVISED FOR RECAPITALISATION OF PSU BANKS: The Finance Ministry has revised its norms for recapitalisation of Public Sector Banks. PSBs looking forward for the next round of capital infusion will need to fulfil the new set of criteria. The second round of capital infusion to these banks would be based on cost of operations, recovery of credit, quality of credit on the basis of risk weighted assets. Only those banks fulfilling these criteria for the third quarter (October-December) in this fiscal will be eligible for capital infusion. The government had released its first round of capital infusion of Rs 22915 crores to 13 banks. The next round of capital infusion is linked to greater efficiency, growth of both credit and deposits and reduction in cost of operations.

5. NEW LENDING NORMS MAY NUDGE BANKS TOWARDS RETAILS LOANS: State Bank of India Chairperson Mrs. Arundhati Bhattacharya has said that stringent norms proposed by RBI for corporate lending will force state run banks to tilt more towards retail lending. Reserve Bank of India, last month had come out with draft guidelines on credit to large corporate borrowers asking banks to make additional provisions if the loan amount crosses the prescribed limit. The latest norms towards lending to large corporates make corporate lending costly, both for banks as well as the borrowing companies.

6. NO CLOSURES, ONLY BRANCH RELOCATIONS AFTER ASSOCIATE BANKS MERGER WITH SBI: The State Bank of India (SBI) may relocate many of its branches after the merger of its associate banks with itself and none of the branches would be shut down. As per the statement made by its chairperson Mrs Arundhati Bhattacharya, these branches will be relocated as it will have better reach. With this the productivity will improve with same number of employees and will have more customer coverage. The merged entity will have more than 24000 branches, will continue to have same number of branches.

7. EQUITAS SMALL FINANCE BANK BEGINS OPERATIONS FROM CHENNAI: Equitas Small Finance Bank Limited (ESFBL) has commenced its business from Chennai with three branches. This is the first private sector Bank from Tamil Nadu post-independence. By the end of 2016-17 the bank plans to have a network of around 400 branches across 11 states with 25% of branches to open in un-banked villages.

SNIPPETS - 10/09/2016

1. SBI RAISES MONEY FROM PERPETUAL BONDS ISSUE : State Bank of India, country’s largest Bank, has raised Rs.2,100 crores through perpetual bonds at coupon rate of 9%. Private Sector lender Yes Bank Ltd has invested the entire sum. PERPETUAL BONDS are bonds with no maturity, and the issuer of the bonds pays interest forever. Investors do not have to redeem the bonds except on call date announced by the issuer. Here SBI has given a five year call option. So Yes Bank has the option to withdraw the money after five years. Perpetual bonds are treated as safe investment but there is catch here- If the issuer incurs losses then he may delay or may not pay the interest. With interest rates falling, some wealthy investors are investing in these bonds, but some of the investors are not fully aware of the inherent risk it carries.

2. SARFAESI ACT TO COVER NBFCs: Now as per Budget proposal Non-Banking Financial Companies (NBFC) with assets of more than Rs.500 crore, will now be covered under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act, 2002. This will allow NBFCs to enjoy the benefits of SARFAESI Act, 2002 that presently apply only to Banks. The measure is a big boost to NBFCs. This will help them to strengthen their recovery capabilities. This will also enable NBFCs to lend with greater confidence as they can be assured of speedier recovery.

3. TWO INDEPENDENT VALUATIONS A MUST BEFORE SALE OF BAD LOANS: the Reserve Bank of India has tightened the recovery norms for banks by mandating that banks to have two mandatory valuations for assets of bad loans of more than 50 crores, before selling them to Asset reconstruction Companies(ARCs). These measures could accelerate the sale and bring down the unrealistic price expectations by banks.

4. RESERVE BANK WIDENS THE SCOPE FOR SALE OF STRESSED ASSETS: In a bid to improve the sale of bad loans by banks, the Reserve Bank of India has now allowed banks to sell these bad and stressed assets to other banks, non-banking Financial companies (NBFCs) or financial institutions. It has also made banks’ boards more accountable for stress resolution.

5. DELINQUNCIES OF PERSONAL LOANS LOWER THAN HOUSING LOANS: Personal Loans, a type of unsecured (clean) loans which typically has a higher rate of delinquencies (defaults), has seen surprisingly lower rate of delinquency as compared to housing loans. This is as per the report released by the credit agency Equifax. According to the report the delinquency of personal loans stands at 0.47% at the end of January-March quarter of 2016. During the same period the housing loan delinquency stood at 0.49%. Home loans, being a secured product, usually have lower rate of delinquencies. For some other products such as auto loans and business loans the percentage of delinquency during the said period stood at 1.11% and 3.22 % respectively. This may be because of the reason that banks have become more vigilant and choosy in granting personal loans.

6. INDIA’S SAVINGS RATE NEEDS A BOOST: As per the report of DBS there is a decline in the gross savings by Indians, estimated to have fallen to 31% of GDP. This needs to be contained as relying on foreign savings puts pressure on the growth path. Increase in Domestic savings is required to fund investments, which otherwise must be financed with foreign capital.

SNIPPETS - 03/09/2016

1. HDFC BANK TO LAUNCH “ROBOT” IN SOME OF ITS BRANCHES: The country’s second largest private sector Bank is planning to launch a Robot (Humanoids) in some of its branches. HDFC Bank is trying to match its Japanese Counterpart as Bank of Tokyo- Mitsubishi has launched a Robot named Nao. HDFC Bank will name its Robot “Project AI”( Artificial Intelligence). The Bank’s first Robot will only perform a limited role, acting as a receptionist. 2. RBI POINTS OUT LOW TRANSMISSION OF RATE CUTS INTO BANK LENDING RATES: Reserve Bank of India has reiterated that there has hardly been any transmission of policy rate cuts into bank lending rates. The Reserve Bank of India has cut the policy rate by 150 basis points ( bps) from January 2015 to April 2016, whereas the median base rate of banks has fallen only by 60 bps. At the same time the decline in median deposit rate is 92 bps. This is because the banks’ deteriorating asset quality and higher provisioning. With Banks turning stingy in passing the RBI’s rate cuts to its consumers (rate cuts in home loans is fallen only by 0.26%), corporates have managed to bring down their borrowing cost by 1.44 % points by tapping bonds market.

3. FUTURE OF INDIAN BANKING SYSTEM BRIGHT DESPITE NPAs: As per a report from Boston Consultancy, despite the on-going stress of deteriorating asset quality, the Indian banking system is expected to be the third biggest in the next decade. Boston Consultancy predicts the Indian banking revenue will be close to $ 400 billion by 2026. Here it says private banks will continue to outshine the state run banks as they will continue to grab more market share year on year.

4. RBI REFORMS HAVE OPENED UP CURRENCY MARKET: The measures RBI announced for development of corporate bond and currency markets covers all the three areas, A) Market Regulations and institution support—here RBI has proposed to cap banks’ exposure to any group companies, this will force corporates to move to bond markets, B) Market participants—At present participation in bond repos is restricted to entities like banks, primary dealers, Mutual funds, Insurance companies etc. But now individual authorised brokers will be allowed to participate in corporate bond repo market, C) Instruments—here RBI has proposed to permit banks to issue perpetual debt instruments (PDI) and debt capital instruments. When these things are implemented it will have deep impact on the corporate debt market.

5. RELIEF FOR BANKS, AS FINANCE MINISTRY RELAXES “FATCA”COMPLIANCE NORMS: Banks and financial institutions have received a breather as regards complying with US enacted Foreign Account Tax Compliance Act (FATCA). The Finance Ministry has said that banks and financial institutions need not enforce “closure“ of accounts by 31st August, 2016 in respect of accounts where self-certification is not obtained and due-diligence not completed. The revised time-lines for completing due diligence and obtaining self-certification will be further notified.

SNIPPETS - 27/08/2016

1. MASALA BONDS IN FOREIGN MARKETS: Masala Bonds is a way for Indian Companies to raise funds from abroad without incurring the risk of depreciating exchange rates. They borrow not from a bank but by selling bonds to investors. These bonds are denominated in Indian rupees and are to be repaid in Indian rupees only. So there is no currency risk to the borrower. That risk is to be borne by the foreign investor. The Reserve Bank of India has formally approved of such bonds and HDFC was the first company to avail this facility last month. It sold Masala bonds at 8.37%, still cheaper than 9 or 10% which they might have paid in India. These bonds are free to trade in London stock exchange.

2. LARGE FIRMS HAVE TO PAY MORE FOR BANK LOANS: RBI has proposed a major overhaul in the way large companies borrow from banks. Starting next financial year, large Indian companies will have to pay more for borrowing from banks, a part of an effort by the Central Bank to curb lenders’ exposure to stressed corporate entities. The Central Bank is also taking steps to increase liquidity and participation in the corporate bond market.

3. PRADHAN MANTRI FASAL BIMA YOZANA: The Hon’ble Prime Minister of India has announced a brand new crop Insurance scheme on 13th January 2016 and this scheme is called Pradhan Mantri Fasal Bima Yozana ( PMFBY). This will be implemented in every state. The main motto of this crop insurance is to provide efficient and low cost insurance support to the farmers which will give financial support to thousands of farmers so that they can sustain even if the yield is damaged. Every Bank Branch in India has been now provided with a portal and details of farmers have to be made in that portal. RBI has directed Banks for strict compliance for implementation of this Fasal Bima Yozana.

4. TRANSFER FUNDS WITHOUT AN ACCOUNT NUMBER VIA UNIFIED PAYMENT SYSTEM( UPI): Reserve Bank of India has cleared the Unified Payment Interface ( UPI), a platform which links bank account numbers to virtual payment addresses. So you can now transfer funds to anyone without even knowing the recipient’s account number through a mobile banking app. The UPI enabled app in effect turns your smartphone into a bank. This has come as a boost to a cashless economy. This mode is even better than RTGS and NEFT as it allows access to more than one bank account, does not need 16 digit bank account, and 11 digit IFSC code. Presently up to Rs 1.00 lakh can be transferred and no charges on money transfer as of now.

5. RBI CURBS LARGE LOANS TO SINGLE BORROWER: The Reserve Bank of India on Thursday announced series of measures to prevent banks from giving large exposure to a few big corporates. The measures come after a handful of distressed borrowers wiped out profits of several banks due to large loans going bad. As a first step the RBI proposed to cap the exposure limit of banks to a single borrower group to 25% of the bank’s equity capital. At present the banks can go up to 55% of their Tier I capital in case of Infra loans. In case of individual entities, the limit has been raised from 15% to 20%. At the same time RBI has paved the way for the corporates to move towards bond market.

6. DOMESTIC SYSTEMATICALLY IMPORTANT BANKS (D-SIB) : SBI and ICICI Bank have been given the status of Domestic systematically Important Banks ( D-SIBs) by Reserve Bank of India for a second consecutive year. As these banks are named as D-SIBs it imposes additional capital requirement. RBI follows the Systematic Importance Score (SISs) for selecting a bank .The selection is also based on the Bank’s size as a percentage of annual GDP.

SNIPPETS - 20/08/2016

1. CUSTOMERS ARE NOT LIABLE FOR E-FRAUDS, IF REPORTED IN TIME: The Reserve Bank of India has introduced a policy of “zero liability” for customers in third party frauds if reported within 3 days. This means banks will have to make good the losses suffered by customers in E-frauds if reported in time. In cases where the customer reports the fraud between 4 and 7 days after coming to know about it, his liability will be capped at Rs.5,000/-. It is further notified that if the bank employee is responsible for the fraud, the customer must get his money back irrespective of whether it is reported well within time or not.

2. BANKS CAN CONFISCATE SECURITY IN CASE OF LOAN DEFAULT: The Enforcement of Security Interest and Recovery of Debts Law and Miscellaneous Provisions (Amendment) Act 2016, has received a GO AHEAD from the President of India and it has been notified. The Act amends four laws—the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest( Sarfaesi) Act, 2002, The Recovery of Debts due to banks and Financial Institutions (RDDBIT) Act, 1993, The Indian Stamp Act, 1899 and the Depositories Act, 1996. This amendment simplifies the procedure to ensure quick disposal of pending cases of banks and financial institutions by the Debt Recovery Tribunal ( DRT). The new legislation is not applicable to agricultural loans as well as student loans.

3. INSURERS WILL HAVE TO DEAL WITH MORE TAXES IN GST REGIME: Insurance companies will potentially have to deal with more taxes once the GST is implemented with the emergence of the Centre and state as dual stakeholders, as per the report. The number of taxes will increase as the calculation of input-output tax credits will be done separately for each individual state in which they are earned..

4. INCOME DECLARATION SCHEME-2016 (IDS), INCOME TAX DEPARTMENT ALLAYS CAPITAL GAINS WORRIES: Under the present Income Declaration Scheme the potential declarants would require to sell their assets to meet IDS tax liability. Here the declarant has to pay 45% tax ( on the fresh market value of the asset as on date) while declaring undisclosed assets and an additional capital gains tax if the said property is to be sold. The Central Board of Direct taxes has clarified that the period of holding the immovable property will be taken on the basis of the actual acquisition date of the property and not from June 2016, thereby capital gains tax burden will not be there. Also the Department further clarified that either the department or the Financial Intelligence Unit will not take any adverse action solely on the basis of cash deposits made in banks from the sale of proceeds for IDS declaration.

5. FIVE THINGS YOU SHOULD KNOW ABOUT CREDIT CARDS: 1. If you miss a payment in a month, the interest amount is calculated from the date of purchase. 2. Do not think the “minimum due amount” is a good reason for delaying your payments as the company still charges you interest for the period. It however does not impact your credit score as you are not termed as a defaulter. 3. Trailing interest is something not understood by many. If you had not made full payment as per previous balance on your card, the interest is calculated from the day of your purchase. Grace period ceases to exist for fresh payments if the payment is not made on your card. 4. Interest is calculated on the full amount even after making a partial payment. 5. Know the date when your credit card bill is generated. By making a purchase on the date of the bill, you can increase the interest free period by almost two months.

6. SBI LAUNCHES NEW HOME LOAN SCHEM TO ATTARCT NEWGEN CUSTOMERS: To woo young customers, SBI has launched a new home loan scheme offering higher amount and up to 5 years of interest moratorium, which looks like a controversial teaser loan. This is SBI’s “FlexiPay Home Loan”, offering its customers an interest moratorium for an initial period of 3 to 5 years and then start paying EMIs. To lower the impact of higher EMI after 3 to 5 years as the interest gets added to the principal amount, the customer is also offered the option of paying only interest during the moratorium (pre-EMI) period of 3 to 5 years.

7. RBI CAUTIONS BANKS ON MIS-SELLING THIRD PARTY PRODUCTS: RBI Governor Mr. Raghuram Rajan said that as per the study undertaken by some academicians/consumer activists, it is found that Banks are mis-selling third party products, especially insurance products. The Reserve Bank of India has asked the Indian Banks Association (IBA) to come out with an appropriate industry practice in regard of sale of third party products.

SNIPPETS - MCLR

MARGINAL COST OF LENDING RATES(MCLR) BY BANKS

Most Bankshave announced the shift from Base Rate(BR) to Marginal Cost of Lending Rate (MCLR)from April 2016 as per RBI Guidelines. .

The new methodology uses the marginal cost or latest cost conditions reflected in the interest rate given by the banks for obtaining funds (from deposits and while borrowing from RBI) while setting their lending rate. This means that the interest rate given by a bank for deposits and the repo rate (for obtaining funds from the RBI) are the decisive factors in the calculation of MCLR.

In essence, the MCLR is determined largely by the marginal cost for funds and especially by the deposit rate and by the repo rate. Any change in repo rate brings changes in marginal cost and hence the MCLR should also be changed.

How MCLR is different from base rate?

The base rate or the standard lending rate by a bank is calculated on the basis of the following factors:

1. Cost for the funds (interest rate given for deposits),
2. Operating expenses,
3. Minimum rate of return (profit), and
4. Cost for the CRR (for the four percent CRR, the RBI is not giving any interest to the banks)

On the other hand, the MCLR is comprised of the following main components.

1. Marginal cost of funds
2. Negative carry on account of CRR
3. Operating costs
4. Tenor premium

It is very clear that the CRR costs and operating expenses are the common factors for both base rate and the MCLR. The factor minimum rate of return is explicitly excluded under MCLR.

But the most important difference is the careful calculation of Marginal costs under MCLR. On the other hand under base rate, the cost is calculated on an average basis by simply averaging the interest rate incurred for deposits. The requirement that MCLR should be revised monthly makes the MCLR very dynamic compared to the base rate.

Under MCLR: 1. Costs that the bank is incurring to get funds (means deposit) is calculated on a marginal basis
2. The marginal costs include Repo rate; whereas this was not included under the base rate.
3. Many other interest rates usually incurred by banks when mobilizing funds also to be carefully considered by banks when calculating the costs.
4. The MCLR should be revised monthly.
5 A tenor premium or higher interest rate for long term loans should be included.

The MCLR should be revised monthly by considering some new factors including the repo rate and other borrowing rates. Specifically the repo rate and other borrowing rate that were not explicitly considered under the base rate system.

As per the new guidelines, banks have to set five benchmark rates for different tenure or time periods ranging from overnight (one day) rates to one year.

IN SHORT WE MAY CONCLUDE THAT MARGINAL COST OF LENDING RATE WOULD REPLACE BASE RATE WHICH WOULD BE BENEFICIAL TO THE BORROWERS.

SNIPPETS - GST

GOODS AND SERVICES TAX(GST) in Nutshell

Goods and Services Tax (GST) is an indirect tax that brings most of the taxes imposed on goods, services, manufacture, sales and consumption of goods under its ambit in to a single domain at the national level. It will change the taxation pattern that is levied separately on goods and services and will introduce a consolidated tax, based on a uniform rate of tax fixed by the government for both goods and services and it is payable at the final point of consumption.

GST has two components, CGST (Central Goods & Service Tax) and SGST(State Goods & Service Tax). Both Centre and State will simultaneously levy tax across the value chain. Under GST since the taxes will be integrated hence it will bring transparency as the burden will be shared between manufacturing and services. It will promote growth, create more employment opportunities and boost the economy as a whole.No tax reform has generated such enormous interest among business and general public as GST. It has in some ways has become a barometer for government’s success. And for the first time the Centre and State have come together on a common platform for GST implementation.

GST makes India a common unified market. There will be just one tax on the supply of goods and services right from sourcing to customer. The new tax regime may be effective from April 01st 2017. Some companies will gain as the GST rate will be lower than the tax now it is paying and some companies will lose as the GST will be more than the tax now they are paying.

BENEFITS OF GST TO BUSINESS & INDUSTRY: 1. Easy Compliance. 2. Common tax rates.3. Removal of cascading effect of taxes. 4. Improved competitiveness.

BENEFITS OF GST FOR THE GOVERNMENT: 1. Easy to administer. 2. Better control of tax leakage. 3. Higher revenue.

BENEFITS OF GST TO THE CUSTOMER: 1. Single and transparent tax. 2. Relief from overall tax burden.

THE BIGGEST BENEFIT WILL BE THAT THE MULTIPLE TAXES LIKE OCTROI, CENTRAL SALES TAX, STATE SALES TAX, ENTRY TAX, TURNOVER TAX ETC WILL NOT BE THERE AND ALL THAT WILL BE BROUGHT UNDER GST. DOING BUSINESS WILL BE MORE EASIER AND COMFORTABLE AS VARIOUS HIDDEN TAXATION WILL NOT BE THERE.

SOME OF THE SECTORS WHICH WILL BE BENEFITED BY GST: Textiles, Auto and Auto dealers, Engineering & capital goods, Power equipment industry, Pharmaceuticals FMCG, Cement.

SOME OF THE SECTORS WHICH WILL HAVE NEGATIVE IMPACT BY GST: IT Sector, Airlines, Mutual Funds, Real estate.

CONCLUSION:The present taxation of goods and services in India is misallocation of resources resulting in to lower productivity and thus lower economic growth. But with the implementation of GST the problems will be effectively addressed as the tax burden is equally distributed from Production/Trade to final consumption. Under GST all different stages of production/distribution and consumption will be covered and taxed.

SNIPPETS - 13/08/2016

1. MCLR REVISION ON CARDS, SAYS RBI GOVERNOR Mr. RAJAN: Reserve bank of India (RBI) governor Mr. Raghuram Rajan said that the central Bank will soon revise the marginal cost of fund –based lending rate ( MCLR) mechanism. This MCLR concept was implemented from April 1 st 2016 , replacing base rate mechanism. Mr.Rajan says it is disappointing that banks had not passed on the benefits of lower interest rates to customers despite ample liquidity. Now banks are sighting the reasons of FCNR(B) redemptions as the reasons for not lowering the interest rates. But most banks have ruled out any immediate transmission of rates despite RBI chief Raghuram Rajan blaming them of not passing the benefits to the customer. They say that the rates will fall once the credit growth picks up.

2. ON TAP BANK LICENCING TO BENEFIT NBFCs: Reserve Bank of India’s decision to herald ‘’ on tap ‘’ universal banking licence regime will benefit non- banking finance companies(NBFC). This is as per the report of Moody’s Investor Service. However it cautioned that more bank licences will be ‘’ credit negative’’ for existing banks as it will increase competition.

3. RELAXATION OF NORMS IN CHEQUE DISHONOURCASES OF Rs 1 CRORE AND ABOVE: As per the existing norms, presently banks are not allowed to issue fresh cheque books in the event of cheque dishonour valuing Rs.1 crore and above on four occasions in a financial year for want of sufficient funds. Relaxing this existing norm, RBI now has left it to Bank’s discretion on whether to issue fresh cheque books or not. Each Bank can now take its own stance in this issue.

4. RBI LAUNCHES WEBSITE “ SACHET” TO TACKLE FRAUD: The Reserve Bank of India has launched a website “SACHET” from which anyone can obtain information regarding entities that are allowed to accept deposits, lodge complaints and share information regarding illegal acceptance of deposits by unscrupulous entities. This will help in curbing unscrupulous money raising activities.

5. RECENT ISSUE OF MASALA BONDS PAVES WAY FOR OPENING UP OF MARKETS: The recent issuance of the first off shore masala bonds ( rupee- denominated bonds in overseas market) by Indian companies could pave the way for a broader opening and development of the market, according to Fitch ratings. This will help in taking advantage of offshore markets to diversify their funding resources without assuming currency risk.

6. 25 YEARS OF REFORM PERIOD: Twenty five years have been completed since economic reforms were set in motion by the then Narasimha Rao government. These far reaching reforms have transformed the economy in a positive way and set it on a growth path. The stock Market which is the barometer of the economy has also gone a sea change during this quarter.

SNIPPETS - 06/08/2016

1. RBI RELEASES GUIDELINES FOR “ON TAP”LICENSING OF PRIVATE SECTOR BANKS: Reserve Bank of India has released guidelines for licensing of universal private sector Banks. Under this, applicants can apply for a banking license anytime. Indian residents with a 10 years senior level experience are eligible to promote a bank but large industry houses have been excluded as eligible entities, although they can invest up to 10%.

2. DHFL BECOMES THE 1st INSTITUTION TO FLOAT BONDS LINKED TO INFLATION: Dewan Housing Finance Ltd is the 1St to raise funds which are inflation linked. It was decided to raise Rs.4,000 crores through a retail bonds sale, which for the first time will also offer interest rates linked to consumer price-based inflation. Here investors can earn interest income in the range of 8.90 – 9.50% irrespective of any wild swings in CPI (consumer price index). This issue has already got record Rs.19,000 crore subscription.

3. YOU TURN A YEAR OLDER A DAY BEFORE YOUR BIRTHDAY- AS PER CBDT: Central Board of Direct taxes (CBDT) has decided that, for tax purpose, a person will be deemed to have attained a certain age on the day preceding his birthday, rather than on the birthday itself. This will benefit mostly the senior citizen, turning 60 or 80 years of age on April 1St, since these two ages bring with them income tax enhanced limit exemptions.

4. RETAIL INVESTORS CAN ACCESS G-SEC MARKET FROM AUGUST 2016: As per Reserve Bank of India latest guidelines, Retail investors can now access Government securities (G-sec) market. Presently it is being used only by large institutional players.

5. ALL STARTUPS ARE NOW ELIGIBLE FOR EXEMPTION FROM ANY PRIOR EXPERIENCE IN PUBLIC PROCUREMENT: All startups have now been made eligible to get exemption from the prior experience criteria in public procurement, a benefit that was till now enjoyed only by micro and small enterprises. Now as per the new criteria all startups are eligible to participate in public tendering process.

6. RAJYA SABHA PASSES THE MUCH AWAITED GST BILL: After a long wait India finally gets the tax regime that is globally competitive and economically gainful. The much awaited GST (Goods and Service Tax) bill was passed by Rajya Sabha on 3rd August. The rate and scope of GST, a single tax which replaces the multiple indirect taxes, are yet to be defined. Lok Sabha has already passed the GST bill last year. Now it will need the President’s assent and approval of 15 Indian states, half of India’s 29.

7. SBI LAUNCHES NEW INNOVATIVE HOUSING LOAN SCHEMES FOR GOVERNMENT EMPLOYEES: State Bank of India has launched cheaper home loans to attract the beneficiaries of 7th pay commission hike, for the Government and Defence personnel. The Bank will offer new Housing loan products—SBI Privilege Home Loan for government employees and SBI Shaurya Home loans for Defence personnel without any processing fees.

SNIPPETS - 30/07/2016

1. INDIAN DIGITAL PAYMENTS TO BE $ 500 BILLION INDUSTRY BY 2020: Due to the ever rising smartphone usage and positive regulatory changes, India will have the most advanced digital payment ecosystem over the next five years. This is ably backed by Unified Payment Interface (UPI) and Aadhaar. This is as per the report issued by Google.

2. COMPANIES TO GET PAN, TAN WITHIN A DAY: Companies can now obtain PAN or TAN registration within a day if they submit digital signature based application. Besides this, individuals can now get a new Permanent Account Number (PAN) through Aadhaar based e-signature facility which will reduce the time gap. Overall this will be a paperless application process.

3. PUBLIC SECTOR BANKS WRITE OFF Rs 1.14 LAKSH CRORE BAD LOANS DURING 2012 T0 2015: A whopping 1.14 crore lakhs of bad loans have been written off by 27 public sector Banks (PSBs) during FY 2012 – 2015. RBI Governor Mr. Raghuram Rajan had recently announced a March 2017 deadline for banks to clean up their balance sheet. For fiscal year ended 2015 alone, PSBs have written off loans amounting to Rs 52,542 crores, an increase of 52.6% over the previous fiscal.

4. RESERVE BANK OF INDIA RELAXES RULE FOR BASEL-III LIQUIDITY COVERAGE RATIO: RBI has relaxed Basel III – mandated liquidity coverage ratios for banks, allowing them to apply an additional one percentage point of deposits they currently hold as government bonds under their statutory liquidity ratios (SLR). Banks can now apply up to 11 % of their deposit base held as SLR or government securities, that banks must hold with RBI. Earlier the same was 10%.

5. YES BANK GETS SEBI APPROVAL FOR SPONSORING A MUTUAL FUND: The Securities Exchange Board of India has given an in-principle approval to YES Bank for sponsoring a mutual fund. The Bank will also set up an asset management company (AMC), besides a trustee company. The AMC and the trustee company would be wholly owned subsidiaries of the Bank. Yes Bank has announced a 32% hike in its net profit for the 1st quarter of 2016.

6. SBI KICKSTARTS THE PROCESS OF MERGER: State Bank of India has kick started the formal process of merging its associate banks and Bharatiya Mahila Bank. The bank has appointed merchant bankers, valuation consultants and law firms. The bank says the proposed mergers should be completed by March 2017.

7. AMAZON’S PREMIUM SERVICE “AMAZON PRIME”LAUNCHED IN INDIA: Amazon has launched their membership service “Amazon Prime” in India. Under this service the members would get guaranteed and assured 1 or 2 day delivery for their purchases on Amazon. This is a bid to outdo Indian e-commerce giant Flipkart.

SNIPPETS - 23/07/2016

1. FREE CIBIL REPORTS ONCE A YEAR FOR ALL: Reserve Bank of India has said that Credit Information Bureau of India ( CIBIL) will soon provide one free credit report to those applying, free of cost once a year. Currently the said report, used by financial institutions to approve loans to individuals costs Rs 500/- per report to individuals. The new provision will come in to effect soon where in each individual desiring to check his/her credit score can do so once in every year.

2. GOVERNEMNT PLANS TO EASE THE PROBLEMS RELATED TO TDS: A lot of tax payers every year complain that often their tax is deducted by their vendors/employers but not transferred to government account, resulting in lot of harassment to the public. To address this issue the Finance Secretary has instructed Officials of Central Board of direct taxes (CBDT) to find a solution for this at the earliest. Some of the problems may be sorted out by upgrading the relevant software.

3. ICICI PRUDENTIAL FILES FOR FIRST IPO BY AN INDIAN INSURANCE COMPANY: ICICI Prudential Insurance Company plans to raise an estimated Rs.4500-5000 crore through IPO. This is the largest Public Offering since 2010. The IPO is exclusively the sale by ICICI Bank, which will offload 18.3 crore shares or 10% in the ICICI Prudential. The pricing would be between Rs 248- 276.

4. SBI- BROOKFIELD TIEUP FOR STRESSED ASSET FUND: State Bank of India has tied up with Brookfield Asset Management to set up a stressed asset fund. An MOU has been signed to this affect, wherein Brookfield will invest Rs 7000/- crores and SBI will invest 5% of total investment. The JV will evaluate and invest in various stressed assets and this will enable banks in general and SBI in particular, to find alternative solution for resolution of stressed assets. Such an approach will be more acceptable to both lenders and borrowers as well.

5. PUBLIC SECTOR BANKS GET Rs 22915 CRORE CAPITAL INFUSION: In line with the announcements made in the union Budget, the government has released over 22000 crores for recapitalization of public sector banks. 13 PSU banks have been benefitted from this, highest being SBI.

6. COMPANIES ACT TO BE AMMENDED FOR GIFT IFSC VENTURES: The government will soon amend the Companies Act to relax provisions for Gujarat Gift City’s international finance centre. The amendments will relax certain company norms. Companies operating in Gift IFSC set up by Indians will not be considered as foreign companies and will be provided with several operational freedoms. These companies will have flexibility in formation of their boards and on independent directors.

7. ROTATION OF AUDITORS BY INDIAN COMPANIES: As per the New Companies Act , every Indian company having a paid-up capital of Rs 20 crores or more needs to change its auditors once in 10 years if it has kept the same auditor for 10 years in a row. As per the recent survey only 18% of the companies are ready for the said rotation.

SNIPPETS - 16/07/2016

1. GROSS NPA LEVEL OF BANKS TO INCREASE, AS PER ICRA: Domestic rating agency ICRA has said that with banks recognizing large NPAs following RBI’s asset quality review, gross NPA level of Indian banks is set to increase. As most banks are yet to fully recognize NPAs, it is likely that NPA addition will remain high in Q4 of FY 16 as well. The report says that around 15-16% of total bank credit is under stress, involving NPAs, restructured advances or other exposures to entities which are facing credit issues.

2. SIT ON BLACK MONEY ISSUE , RECOMMENDS BAN ON CASH TRANSACTIONS ABOVE Rs 3 LAKH: The Special Investigation Team ( SIT) on Black Money has recommended a total ban on cash transactions above Rs 3.00 lakh and a separate law to declare such transactions as illegal and punishable. SIT has also suggested an upper limit of Rs 15.00 lakh on cash holding.

3. NPCI TO AUDIT FINANCIAL INCLUSION TECH PLATFORMS: National Payments Corporation of India ( NPCI) will audit the financial Inclusion technology platform of all banks after it was found that 80% of interbank transactions failed for accounts opened under government’s Jan Dhan Scheme. During a review it was found that the Financial Inclusion switch of some banks was not working leading to such transaction failures. The government has asked NPCI to look into the issue as it looks to push various social sector schemes through the Jan Dhan.

4. BANKS’ STATE GOVT DEBT PILE AT STAKE : The Reserve Bank of India is bracing for the major changes on the proposed global regulatory framework as per Basel norms. It would hit the Indian Banks with higher capital charges for the already piled up government debt in their books. Tighter rules in this front will bite Indian Banks, already struggling with surging bad loan scenario and provisions thereon. With nearly 30% of their total advances in state debt, these Indian banks will take a hit if the Basel Committee on banking supervision raises capital requirements on sovereign Bonds.

5. RBI ASKS BANKS TO EXCHANGE UPTO 20 SOILED NOTES FREE OF CHARGE: Reserve Bank of India has instructed Indian Banks to exchange up to 20 pieces of soiled currency notes per day free of charge with a maximum value of Rs 5000/- across the counter. If the number of currency notes exceeds 20 then the bank may charge appropriate service charges. This is an effort to improve customer service.

6. HDFC RAISES Rs 3000/- CRORE IN 1St EVER “MASALA BONDS” ISSUE: HDFC has raised Rs 3000/- crores in its first ever “Masala Bond” issue. This Rupee–denominated bonds got over- subscribed by 4.3 times. These Masala Bonds are Indian currency bonds and bear a fixed semi-annual coupon rate of 7.875% per annum and has tenure of 3 years and 1 month.

7. FINANCE MINISTRY TO SOON CLEAR 1st INSTALLMENT OF CAPITAL INFUSION IN PUBLIC SECTOR BANKS: The Finance Ministry is likely to clear its 1st instalment of capital infusion in public sector banks. The government has made Budget provision of Rs.25,000/- crores capital infusion in PSBs for the current fiscal. Each bank has made a detailed request for fresh fund infusion taking into account issues pertaining to NPAs and growth projections. However the Finance Ministry has said the 1st instalment would be less than Rs.20,000/- crores.

SNIPPETS - 09/07/2016

1. “FITCH”DOWNGRADES INDIAN BANKING OUTLOOK TO NEGATIVE: Rating agency “FITCH” has downgraded its outlook on Indian Banking Sector to “Negative”, from “Stable”, due to more downside risks arising out of stressed loans and weak corporate earnings which may further rock Indian Banks. The agency has affirmed long term ratings of nine (9) large Indian Banks including SBI to “BBB-“. According to the agency the asset quality will further deteriorate unless they are counter balanced by sizable capital infusions.

2. RBI MAY SOON ALLOW INTEROPERTABILITY OF INDIA POST’S PAYMENT BANK ATMs: India Posts which had last year won a licence to start and operate a payment bank, has not been able to make much headway on starting the operations. But of late, India Posts, world’s largest mail delivery network, is carving out a separate vertical to manage its banking services. And soon it may get the nod from RBI for interoperability of its ATMs with those of PSU banks.

3. RESERVE BANK OF INDIA ALLOWS BANKS TO ASSIGN HIGHER VALUE TO HIDDEN ASSETS IN BALANCE SHEET: RBI has revised norms allowing lenders to assign higher values to “Hidden Assets” in their respective balance sheets. The “Hidden Assets” include undervalued real estate, taxes paid but not reckoned and foreign currency reserves. Until now Banks could re-value real estate assets and recognize half of the gains as reserves but these reserved were considered part of Tier II capital and this did not help as the main shortfall is in Tier I capital, which until now could be improved through equity infusion or ploughing back profits. Now banks can recognize 45% of the valuation gains of hidden assets in Tier I capital even as they continue to use the premises. This new norm will reduce Rs 35000/- crores worth of capital requirement burden for public sector banks.

4. NEW DIVIDEND TAX MAY NOT HIT PROMOTERS MUCH: The additional 10% tax on dividend income announced in the recent Budget would not affect many wealthy promoter groups. The additional 10% tax on dividend income is applicable for the equity shares held in individual capacity, through HUF and partnership firms. Trusts and holding companies would not attract the proposed additional tax on dividend. Since most of the holdings in blue chip companies are held by the promoters through their trusts and holding companies, the dividend thus received by the said trust and holding company would still remain tax free.

5. BANK OF BARODA PLANS RATING BASED RETAIL LENDING: Bank of Baroda will be the first Bank in India to offer rating based lending to its retail mortgage loan seekers. This means the Bank will offer loan to retails customers based on their credit scores and not as a uniform rate irrespective of the credit rate till now.

6. GOVERNMENT OF INDIA MAY CHANGE THE EXISTING FINANCIAL YEAR : The government has set up a committee to deliberate whether india needs a new financial year and the implications of such a shift. India currently follows April-March as the financial year.

SNIPPETS - 02/07/2016

1. NBFCs PERFORM MUCH BETTER THAN BANKS: As per RBIs latest Financial Stability Report (FSR) NBFCs (Non-Banking finance Corporation) financial performance is unchanged for the last two years. Net profit as percentage to total income remained at 15.3% and return on assets (ROA) stood at 22% between March 2015 to March 2016. Loans and advances during the fiscal increased by 16.6% while total borrowings of NBFC’s went up by 15%. Bank credit on the other hand grew at only 10%. The NBFC sector is growing at the cost of Banks, which is saddled by bad loans and poor profits. 2. HIGHER TDS SCRAPPED FOR NON RESIDENT INVESTORS: Non-resident investors without PAN details are currently subjected to higher rate of TDS (20%). It is proposed to amend the relevant provision to provide that on furnishing of alternative documents like the residential address proof, tax residency certificate from the government of their home country, tax identification number or any unique identification number provided by their country of residence, tax will be deducted at normal rate.

3. BANKS BAD LOANS MAY RISE TO 8.5% OF ASSETS: As per RBI latest report Gross non-performing assets (Gross NPAs) of public sector banks may rise to 8.5% of the total assets by March 2017, from the present level of 7.6% in March 2016. This is as per the latest “Stress Tests” conducted by Reserve Bank of India.

4. MERGING PSBs HAS MORE RISKS THAN BENEFITS: As per global rating agency- Moodys’, the government’s plan to consolidate Public Sector Banks ( PSBs) has more risks than benefits. This is because banks have weak financial metrics to execute mergers and also could face lot of opposition from employee unions demanding parity in pension. The Indian government aims to consolidate the number of public sector banks from the present 27 to around 10 strong banks.

5. MOBILE BASED STARTUPS TO GET OVER $ 8 BILLION FUNDING IN NEXT 5 YEARS: With mobile phones contributing 40% of all E-commerce sales in India, startups in M-commerce, video gaming, streaming, and m-payments segment will get majority of funding in the next five years as well. This is as per the latest Annual Indian Mobile Ecosystem Report.

6. ALIBABA RAKUTEN EYES INDIAN E-COMMERCE BUSINESS: The Alibaba Rakuten Japan, the biggest E-commerce player in Japan which earns over 40% of its revenue in Japan may soon start its e-commerce operations in India in less than two months from now. It will probably work with two business models—the conventional B2C e-commerce and cash back set up in India.

7. TAXMEN TOLD TO STEP UP EFFORTS FOR BLACK MONEY WINDOW SUCCESS: The Income Tax Department has asked its officers to make “all out efforts” to attract potential declarants under domestic black money window by assuring them of confidential and hassle free disclosures.

SNIPPETS - 25/06/2016

1. SOME OF INDIAN STARTUPS SHAKEN BY NIKESH ARORA’S RESIGNATION: Some of the Indian startups like OLA, HOUSING, SNAPDEAL etc are taken aback by the resignation of Mr. Nikesh Arora from the post of President-Indian Operations in Soft Bank. After taking over as President-Indian Operations of Soft Bank since 2014, Nikesh Arora managed to get substantial funding to the Indian Startups. Since then many a startups have got financial assistance to the tune of around $ 1.00 Billion ( App Rs 6700 Crores). Soft Bank paid around 1500 Crores to Mr. Nikesh Arora as salary in these two years. Moreover all these Indian Startups are yet to make a breakeven in their respective business with accumulated losses.

2. HDFC BANK LAUNCHES SME e-bank: The country’s second largest private sector Bank has launched a digital banking for its small and medium enterprises ( SME) customers. SME customers can do away with the hassle of physical availability and personal contacts with the relationship Manager and makes the process faster. According to the Bank it will save costs and man power. It hopes to make service to take off the said e- banking facility in tier -2 cities in a much better way.

3. GOVERNMENT “frees” STARTUPS IN INDIA OF “ANGEL TAX”: The Government Of India has removed the ANGEL TAX on Startups. Till now any new firm had to pay a tax if investments made by an Indian resident exceed the fair value of the firm’s shares. The Central Board of Direst Taxes ( CBDT) via its fresh notification has made the necessary changes where by Angel Tax will not be levied in future.

4. NON PERFORMING ASSETS ( NPAs) IS THE MAIN REASON FOR LOW CREDIT GROWTH: Reserve bank Governor Mr. Raghuram Rajan has blamed the slow growth of credit in public sector banks due to the stress of NPAs. According to Mr. Rajan the slowdown in credit growth in public sector banks has been largely due to the NPA stress in these banks and not due to high interest rates.

5. GOVERNMENT IS PLANNING FOR THE LARGEST E-MARKETPLACE : The Finance Ministry has given clearance for creation of “Government e-Marketplace” for online purchase of goods and services to various government ministries and departments. The Government’s central purchase arm has conceptualised an online portal called GeM or Governement e-marketplace. It will allow Govt Officials to make routine office purchases like cutlery, office equipment, etc. It is estimated that the purchases through the portal could touch a whopping 1.4 to 1.8 lakh crores, much higher than the rough figure of 80000/- crores sales that of Flipkart is targeting for June 2016.

6. UNITED KINGDOM VOTES TO LEAVE EU IN A HISTORIC REFERANDUM: UK has voted to leave the European Union in a historic referendum (with a majority margin of 52% to 48%). As a result the Pound plummeted to a 31 year low as market responded to the news. The Indian stock market responding to the news, the Sensex slumped around 650 points and Rupee plunged over 1.4% to 68.21 per dollar mark. British Prime Minister Mr. David Cameron resigns over the BREXIT issue.

SNIPPETS - 18/06/2016

1. STATE BANK OF INDIA SET TO MERGE ITS FIVE ASSOCIATE BANKS AND MAHILA BANK: Cabinet has given its approval for merger of five associate Banks and Mahila Bank with SBI. The much anticipated merger will be completed in financial year 2017.Following this merger, SBI will move into the ranks of top 50 banks globally and some visibility at global level will be seen.

2. STATE BANK OF INDIA CREATES A SEPARATE DEDICATED FUND FOR STARTUPS: State Bank of India has created a dedicated IT innovations and startups fund and has set aside Rs 200 crores for investment in promoting startups. The fund will extend up to 3 Crore to any Indian registered startup company for promoting its business in India using information technology for banking.

3. SOME OF INDIA’S TOP FIRMS FACE DEBT TRAP: India’s biggest companies ranked between 11 to 20 are finding it very tough to service their debt. In financial year 2016, for the first time in a decade the combined operating profit of the country’s top 11 to 20 companies fell short of their interest obligations, leading to potential loan default by some of them. This will result in lot strain on the country’s economy.

4. MAJOR BORROWERS FACE CASH CRUNCH: More than 1000 borrowers have outstandings that are substantially larger than the amounts sanctioned to them by banks. As on March 2016 the total outstandings of 1000 borrowers were 150%more than the sanctioned limit. This is the result of short term requirements met by banks to help these firms to tide over their cash crunch.

5. RESERVE BANK OF INDIA PRESCRIBES GUIDELINES ON OWNERSHIP IN PRIVATE BANKS: RBI has released and elaborate matrix of shareholding limits in private sector banks in view of the additional capital required by these banks after implementation of Basel III regulations and also to rationalize ownership limits.

6. NBFCs GIVE HANDSOME RETURNS ON INVESTMENTS TO ITS INVESTORS: Most Non-Banking Finance Corporations (NBFCs) have returned handsome returns to its investors. As per the data given by Capitaline , in a sample of top 12 stocks with a market capitalisation of over Rs 10000 crores, that returned investors more than 500% in a span of five years, NBFCs like Bajaj Finance, GRUH Finance, Cholamandalam Finance have turned out to be multibaggers, returning between 500% to 1100%

SNIPPETS - 11/06/2016

1. RBI FORMULATES TWO FUNDS BY BANKS TO FACE BAD LOAN SCENARIO: Reserve Bank of India is finalising a formulation of two funds that will help debt ridden companies and also give a breathing space to Indian Banks saddled with sticky loan portfolio. Reserve Bank of India has written to Indian Banks’ Association to set up two different funds—one to infuse equity into the stressed companies and the other fund to give working capital finance. The first fund will be called Stressed Assets Equity Fund ( SAEF) for equity infusion. The second fund is called Stressed Asset Lending Fund ( SALF) will be strictly restricted for providing last –mile financing. Both these funds may receive contribution from the Government, Banks, Insurers, as well as local and overseas investors. The modalities are being finalised.

2. RESERVE BANK EMPOWERS MORE POWERS TO LENDERS TO TACKLE NPA SITUATION: Taking a positive view in tackling the mounting NPA situation in the country, RBI is planning to overhaul the entire strategic debt restructuring ( SDR) mechanism. This includes giving more powers to lenders while resolution process. The RBI is expected to allow Banks to convert the debt into equity to initiate an SDR but without changing the current management.

3. INDIA FACES THE PROSPECT OF 20 $ BN IN OUTFLOWS: Reserve Bank of India has said that around 26 $ billion Foreign Currency Non Resident ( Bank) Deposits ( FCNR- B) is due for renewal/redemption this year. Out of this, RBI estimates that around 20 $ billion may not be renewed and this will amount to outflow. RBI has said that in case of dollar volatility due to this, RBI may intervene but Banks should not take this for granted.

4. NBFC MARKET CAPITALISATION IS TWICE THAT OF PSU BANKS: Non Banking Finance Companies ( NBFCs) may have smaller scale of operations, but when it comes to market capitalisation, they are as good as private sector Banks. Ten years ago the market capitalisation of NBFCs was just 50% of Public Sector Banks’. But now as of February 2016 figures, it is twice that of PSUs. This clearly shows that NBSCs are slowly eating the markets of PSUs.

5. STATE BANK OF INDIA ACTIVATES E- FILING OF RETURNS VIA ATMs: State Bank of India became the first Bank to launch E-filing of tax returns. The Income Tax Department has initiated and launched an ATM based validation system for filing E-ITRs by tax payers. Now Electronic Verification Code ( EVC) can be generated by pre validating your Automated Teller Machine (ATM) provided by the Bank where a tax payer has an account.

6. MOODY’S INVESTORS SERVICE SAYS INDIAN BANKS NEED Rs 1.2 LAKH CRORE CAPITAL INFUSION: Moody’s has said asset quality of Indian PSU Banks will be under stress for the next 12 months due to rising provisioning and as a result Government will have to infuse Rs 1.2 Lakh Crore into PSUs by 2020 to strengthen their balance Sheets. This is much higher than the earlier plan envisaged by the Government.

SNIPPETS - 04/06/2016

1. MUDRA DISBURSES Rs 1.43 LAKH CRORE TO SMALL AND MICRO ENTERPRISES: The Micro Units Development and Refinance ( MUDRA) , a loan scheme launched by the Government has disbursed an amount of 1.43 Lakh Crores and most of the beneficiaries are the new entrants in Small and micro enterprises. These figures are as on May 2016.

2. PRIVATE BANKS PIP PSUs IN FY 16 BALANCE SHEET GROWTH: Balance Sheets of 22 PSUs for the financial year 2016 grew by a meagre figure of just 3.4 lakh crore, as compared to the increase of Rs 4.3 lakh crore in the group of 13 private sector Banks. Private sector Banks achieved this growth by way of 18.1% growth rate as compared to a meagre growth rate of 4.1% by Public Sector Banks. This is a clear indication that Private sector Banks are taking the market away from the PSUs.

3. NEW NORMS FOR RATING AGENCIES SOON : Security Exchange Board of India ( SEBI) is taking tough stance towards the credit rating agencies ( CRA) and has said that it will come out with fresh set of regulations governing these bodies. SEBI said the underlying principle behind these norms is to ensure enhanced transparency and accountability.

4. INDIA POST PAYMENT BANK APPROVED: The Union Cabinet on 1st June 2016 granted its approval to set up India Post’s payment Bank. Initially 650 branches will be made operational by September 2017. These 650 payment Bank branches will be linked to all rural post offices. The payments bank will be managed with a professional setup, headed by a Chief Executive officer.

5. EQUALISATION LEVY ON START-UPS : Starting June 1st the Indian Start-ups will have additional financial burden and administrative overload by way of 6% equalisation Levy ( Now popularly known as GOOGLE TAX) . Indian Start-ups are largely dependent on online platforms like Google, Facebook, Twitter, LinkedIn etc to drive their business, will now have to bear a Equalisation levy of 6%. Under the new rules , Indian advertisers will have to withhold 6% of the gross amount paid for online advertisements (payment of more than 1 Lakh a year to an overseas technology company) as equalisation levy. As a result of this Indian Start-ups will have to now shell out 6% more on their marketing budget which will immensely impact their profitability.

6. START-UPS WITH MARKED DOWN VALUATIONS MAY GET TAX NOTICE: The Income Tax Department is discussing a controversial move to levy tax on those start-ups whose valuations have fallen recently on the grounds that the first premium was more than the firm’s fair value. Start-ups are already worried about lack of further funding and falling valuations, and added with the recent Equalisation levy of 6% they will find it very difficult to manage things.

SNIPPETS - 28/05/2016

1. RISING NO. OF APPLICATIONS TO SET UP ARCs: With the recent spurt in NPA levels of all the banks added with the Stress in Corporates showing no signs of letting up, Reserve Bank of India has received a bunch of applications for licences to set up Asset Reconstruction Companies (ARCs).

2. 20 PSU BANKS POST LOSS IN Q4 OF THE FINANCIAL YEAR: 20 PSU Banks have a shown a combined loss of Rs 16272 crores loss for the fourth quarter ended March 2016, as bad loans situation worsened. Non-Performing Assets in some Banks have crossed the RBI’s tolerance level and that could prompt for more corrective action in future.

3. RESERVE BANK OF INDIA PLANS CAP ON CUSTOMER LIABILITY IN ONLINE FRAUDS: The RBI is examining a proposal to cap customers’ liability in the event of online fraud. With increase in online transactions, complaints regarding online frauds have also increased. It is imperative to retain customers’ confidence in the delivery channels. By imposing such measures like capping the liability, the customer confidence can be boosted.

4. ICICI BANK INTRODUCES “POSITIVE PAY“ FEATURE : ICICI Bank has introduced Positive Pay feature in its Mobile APP. This allows a customer to transfer an image of the cheque (issued by him to his clients) to the Bank. Thus ICICI Bank becomes the first Bank to deploy “Positive Pay” to individual customers. This allows for a safe and faster processing of a cheque as it alleviates fraud risk. With this “Positive Pay” process the Bank does not have to rely on manual or electronic verification as the information received from the customer is more authentic and thus frauds can be avoided.

5. INCREASE IN SERVICE TAX FROM 01/06/2016: From 01/06/2016 onwards the service tax applicable will be 15% , from the existing level of 14.5%, an increase of 0.50%

6. SEBI TO DELIST 4200 FIRMS: Securities Exchange Board of India ( SEBI) is planning to take number of steps including delisting of non-trading and poorly traded companies. This is a step to further safeguard the interest of investors.

7. RBI ASKS BANKS TO UPGRADE ALL ITS ATMs: Reserve Bank of India has asked all banks to upgrade all ATMs by September 2017 with additional safety measures to prevent skimming and cloning of debit and credit cards. Presently the ATM infrastructure on the whole continues to process card transactions based on the data from magnetic strips. The Central Bank has issued instructions to enable all ATM to accept and process EMV Chips and PIN cards. This would enhance the safety and security of ATM Transactions.

SNIPPETS - 21/05/2016

1. Merger of SBI associate banks with SBI: State Bank Of India, India’s largest Bank has proposed merger of its five associate Banks along with Bharatiya Mahila Bank ( BMB) with itself. It sought Government’s approval for the same. It is a major bid to consolidate public sector banking in India.

2. P-note norms tighten by SEBI: The Securities Exchange Board of India ( SEBI) has tightened the screws on misuse of participatory notes ( P- Notes) in laundering black money. The regulatory board made it mandatory for users of these overseas instruments to follow Indian Anti –money laundering law and report any suspicious transactions immediately.

3. HSBC to halve its branches in India: HSBC has announced that it will halve its branches in India to 26 branches from its current 50 branches across India. The said move could lead to over 300 job losses. HSBC attributed the move to changes in the behaviour of customers who are increasingly moving towards ‘DIGITAL CHANNELS’ for their banking needs.

4. Punjab National Bank posts record loss: Punjab National Bank posted the largest ever quarterly loss ever reported by an Indian Bank. The Bank made a net loss of Rs 5367 crores in January-March 2016 quarter. This is the result of high provisioning following a surge in gross Non Performing Assets which is almost doubled compared to last year.

5. Three More PSBs may be asked to merge with bigger banks: The Government is looking at combining three other Banks - UCO Bank, Bank of India and Indian Overseas Bank with stronger entities. The Government further clarified that the move of merger proposal has to come from the Banks and that the Government will act only as facilitator.

6. Sun Pharmaceuticals to drop Payment Bank plans: Sun Pharmaceuticals along with proposed partners Telenor and IDFC has decided not to move ahead on the in-principle approval received for setting up of a Payment Bank. It is the second applicant to back out after Cholamandalam Finance.

7. Bank Panel prepares plan to resolve bad loan woes: The Bank Board Bureau ( BBB) which is a panel of experts, is preparing an intermediate mechanism to ensure early resolution with regard to the early settlement of dues. This will provide comfort to the Bank Management.

8. Bank chiefs will not be questioned over NPA resolution decisions : Banks Board Bureau(BBB) Chairman Vinod Rai has said that in the next fortnight the Board will put in place a new intermediate mechanism that will provide cover to bank chiefs on their bad loan resolution decisions.

SNIPPETS - 14/05/2016

1. Singapore’s DBS Bank offers 7% on Digital Bank accounts: Singapore’s DBS Bank enters India with an intension to make its mark in Indian Banking even as it awaits for RBI clearance to upgrade its branch to a subsidiary. It is offering 7% rate of interest with zero balance on Digital savings Bank accounts and unlimited access to ATMs. These accounts can be opened by anyone with a smart phone who is having an Aadhar card and a PAN card. The Bank will be in a position to offer better deal to customers because of its lower cost as it will avoid branch banking and people costs.

2. RBI instructs Banks to exercise caution while giving loans to discoms: Reserve Bank of India has cautioned state run banks from lending heavily to power distribution companies ( discoms). It says that any additional exposure to power distribution companies will be viewed seriously as it will result in “ ever greening” and will invite supervisory measures.

3. Financial Companies can now hold up to 40% in Banks: The RBI has relaxed the cap on maximum shareholding in private banks by individuals and financial institutions. As per the new guidelines a financial institution can hold up to 40% and individuals can hold up to 10%. Non-financial entities have been allowed up to 15%. This revision is affected considering the new licensing of private sector banks and the need for additional capital for banks after the Basel III Capital regulations come into force.

4. China pips USA as world’s No 1 investor: China has overtaken USA by signing the highest number of overseas deals in 2016. The deals are mostly for the purchase of foreign companies. Many Chines companies, flush with funds are finding it difficult to identify investment targets in China due to slowdown of economy in China.

5. “High Risk credit rating” hit Foreign banks’ India scale up: Foreign Banks have stopped opening branches in India as they need to set aside more capital due to country’s “ Higher risk “credit rating as they feel it is not worth doing so.

6. Firms with heavy debt may face credit squeeze: The Reserve Bank of India has proposed to raise provisioning and risk weights for fresh loans given to highly leveraged companies. This is to discourage banks from lending to such companies, which are said to have caused concentration of credit risk in banking sector. RBI said it would bring in a framework to progressively reduce the total exposure of banks to such corporate entities by revising down the normal borrowing limit of the company. This will come into effect from financial year 2017-18.

7. India – Mauritius Tax Treaty : The revamped india-mauritius tax treaty will now apply to investment in shares. In our opinion investors in Mutual funds, derivatives and debt will likely to escape tax, as these instruments are not mentioned in the reworked Double Taxation Avoidance Agreement(DTAA).

SNIPPETS - 06/05/2016

1. Government drops capital gains tax on start-up shares held for 2 years: Currently there is no capital gains tax on listed company shares if those stocks are held for 12 months, however the shares of unlisted companies face capital gains tax of 20% even after 3 years. Government inserted an amendment to the finance bill to provide for capital gains exemption if shares of unlisted company were held for a period 2 years. This will be a very good boost to the new start-ups.

2. RBI to open permanent window for new bank licences : RBI will open a permanent window for accepting applications to start up a full-fledged bank. There are two major changes here. Corporates have been kept out and individual promoters have been allowed. It is also not necessary for individuals to float a non-operating holding company, which was mandatory earlier. While corporates cannot promote banks, they are allowed to invest up to 10% in a new bank. This will make way for many new players trying to enter in to banking business and create lot of difficulty in sustaining business for existing Banks.

3. The valuation for E-Commerce business started bleeding: With two more prominent investors pruning down their share in Flipkart, it is apparent that E-Commerce business particularly E-Retail business has started to show a downward trend.

4. Government may offer bluechip PSU shares to FIIs and domestic buyers: The Finance Ministry is considering the option of Institutional Placement Programme ( IPP) route to dilute the stake in bluechip PSUs. This is in response to the lukewarm response it got from retail investors.

5. World’s first Diamond trading Exchange is incorporated in India: The Singapore Diamond Investment Exchange ( SDiX) World’s first and only commodity exchange trading in physically settled diamonds, has started its operation in India from 05th May 2016. At present trading is done after viewing diamonds and usually one on one basis. Once the exchange picks up, it will be portal based and with transparent pricing. This would also bring in investors in diamond trading.

6. RBI starts meeting major players in P2P lending: After releasing a consultation paper on peer-to-peer ( P2P) lending, RBI has now started meeting leading P2P players for preparing final guidelines for P2P lending platforms .

7. As per World Bank release the remittances to India by overseas Indians has decreased for the first time since 2009. This has resulted in a low growth of NRE Funds in Banks across India.

8. Bank credit registers growth of 9.7% in December quarter: RBI says that this growth is largely due to higher credit growth by private sector Banks.

SNIPPETS - 29/04/2016

1. First Small Finance Bank—Capital Small Finance Bank starts operation in Chandigarh. It commenced business with 10 Branches and has approval for 27 branches.

2. Gold Imports dip to 8% in 2015-16. Gold imports in 2015-16 declined to around 8% due to weak Global prices.

3. No Interest subsidy on Crop Loans above Rs 3.00 lakh. A Government panel set up to suggest Better implementation of Farm credit has SUGGESTED that interest subvention should not be Provided to short term crop loans of above Rs 3.00 lakhs.

4. Parliamentary panel clears Bankruptcy law, sets stage for passage of the Bankruptcy law.

5. The rising Number of Bad Loans in Public Sector banks added by the Vijay Mallya Issue has Prompted the CVC ( Central Vigilance Commission) to ask public sector Banks to draw up a Proper second layer of verification process for valuation reports and legal reports and such Documents submitted by potential borrower.

5. Public Sector banks have been informed and instructed by the Government to gear up their recovery measures in NPA accounts, if they are expecting capital infusion from the Government.

6. Government to set up National Infrastructure Investment Fund ( NIIF)with a initial corpus of Rs.40000/- crores. Under this the NIIF will deal with stressed Bank assets. It will look for viable Projects which are stressed, acquire it from Banks and financial institutions at a discounted price, nurse them back to good financial health and sell it back to prospective investors.

7. The Reserve Bank of India has suggested that Peer To Peer ( P 2 P) lenders be treated as Non Banking Finance Companies ( NBFC) with a minimum capital infusion of Rs 2.00 crores. The RBI has allowed P2P lenders to continue connecting lenders and borrowers through an online platform. They have specifically been restricted from taking any form of Deposits. RBI has clearly stated that P2P lenders will not indulge in any lending or borrowing activities.

8. Luxury Items like Gold Jewellery can’t stay out of tax net. The Government has ruled out roll Back of 1% excise duty on Gold jewellery levied in the recent budget, calling it an luxury item. It said Gold cannot stay out of tax net when goods used by common man were being taxed.

SNIPPETS - 22/04/2016

1. RBI informs Banks to provide for the fraudulent loans as well besides NPA accounts, even though EMI / Interest service is regular in fraudulent loans.

2. RBI allows Banks to bring down SLR to 20.50% by March 2017.

3. SBI partners with Snapdeal to offer loans to E-commerce sellers.

4. MasterCard may soon introduce a face recognition system that enables bill payment after user clicks a selfie and blinks . Blinking is made mandatory to assure that the person is live and not a photo. This will replace the present usage of password or PIN.

5. Peer to Peer ( P2P)Lenders Fear Strict Regulations from RBI may hurt their growth.

6. RBI Governor says India is growing fast but still a long way to go , as he says that we are still one of the poorest large countries in the world on a per capita income basis.

7. THE REAL ESTATE BILL 2016: Recently Rajya Sabha passed the Real Estate Bill 2016. This bill is designed to protect the consumer interest, ensure efficiency in all property related transactions, improve accountability of developers, more transparency which will boost the investor confidence thereby increase in more real estate investments. Some of the fine points of the Real Estate Bill 2016 are : A) It provides for setting up of Real Estate Regulators Authorities ( RERAs) at the state level which will ensure timely execution of projects. B) It is now mandatory for all residential and commercial projects to register with the Regulatory and this will apply for the existing and new projects as well. All properties with a size greater than 500 sq mt ( 8 Flats) will fall under the scope of this law. C) The Developer will have to deposit 70% of their project cost in an Escrow account. This is to ensure that they do not consolidate and divert the funds of one project to the other. This will ensure timely completion of the project. D) The bill provides for an imprisonment of up to 3 years for the promoters and up to 1 year to the real estate brokers for any violations of Appellate Tribunals and also monetary penalties or Both. E) As per the Bill it will become mandatory for sellers to disclose all information like project cost, all approvals, land status, contractor details, scheduled and completion of the project with the customer ( Buyer) as well as RERA. It is debated that this bill will bring agony to the Promoters and builders. But when you go through the finer points of the said bill we can conclude that without a tough housing regulatory in place, it is difficult to differentiate a good builder from a bad one.

SNIPPETS - 16/04/2016

1. International Arbitration Centre to open in Mumbai in August 2016. Instead of sending these large contractual disputes beyond Indian borders like Singapore, Dubai and London, now the disputes can be well settled in Mumbai itself.

2. Oriental Bank Of Commerce is the First Public Sector Bank to announce monthly interest credit in Savings Bank accounts.

3. RBI launches new Payment system called “UNIFIED PAYMENT INTERFACE ( UPI). This will enable people to send and receive funds across Bank accounts just through a single identification code. While using UPI, account holder need not share any account details.

4. RBI bets on payment banks for innovation in Banking field.

5. Bharati Airtel is the first Company to receive the formal licence to form the payment Bank under a joint venture with Kotak Mahindra Bank.

6. RBI Governor hints at further rate cuts if Monsoon is good.

7. Total Bank Deposit growth for the financial year 2016 slows to 53 year low of 9.1%

8. Many Banks announce certain schematic Deposit Schemes for number of days like 444 days, 555 days, 1111 days etc. Under such deposit schemes the Interest payment should be calculated in the form of simple interest for the actual number of days for which period the deposit is held. But some Banks calculate interest on quarterly basis for the completed quarters and balance interest on the number of days remaining. This actually reduces the total interest paid as compared to interest to be paid purely in terms of total number of days.

SNIPPETS - 09/04/2016

1. RBI cuts Repo rate by 25 bps

2. Gold Imports drop by 34%

3. Tata Steel Reviews European Operations.

4. Credit Slowdown may affect SME sector very Badly

5. Bankers decline Mr. Mallya’s offer of loan settlement.

6. Tax Collection in 2015-16 exceeds the target.

7. RBI details plans on differentiated bank licences.

8. Prime Minister Launches STAND UP INDIA – START UP INDIA Scheme under the Prime Minister Mudra Yojana.—It is a loan scheme wherein the SC/ST and Women Entrepreneurs will be given financial assistance from Rs 10.00 lakhs to 100.00 Lakhs for setting up of greenfield enterprises in Manufacturing and trading sectors. Repayment will be up to 7 years with a margin of 25%. Loan is to be covered under the Credit Guarantee scheme of the Government.