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The Cabinet on Wednesday approved the proposed merger of State Bank of India (SBI) and five subsidiaries — a combination that will create the first Indian lender to rank among the world’s top 50. State Bank of Bikaner and Jaipur (SBBJ), State Bank of Hyderabad (SBH), State Bank of Mysore (SBM), State Bank of Patiala (SBP) and State Bank of Travancore (SBT) will merge with the country’s largest bank, widening the gap between SBI and the No. 2 lender, HDFC Bank Ltd. The Cabinet approved the merger proposals submitted by the boards of these banks, finance minister Arun Jaitley said at a press briefing, adding that a proposal to merge Bharatiya Mahila Bank (BMB) with SBI is still under consideration. “This merger will lead to far greater operational efficiency and synergy of operations. When the cost of operations comes down, the cost of funds will come down,” he said. “SBI will become a very large bank but not merely from a domestic point of view. “We are considering the proposa...

PREPARING FOR NEW REGIME Experts say subsidiaries created to avail of excise duty incentives will be irrelevant, and mergers will help reduce compliance work Various companies are rushing to merge their subsidiaries with themselves ahead of the implementation of Goods and Services Tax (GST) to reduce tax, operational and administrative costs and to eliminate multiple legal entities. At least 100 companies, such as Asian Paints, Sun Pharma, L&T, BPCL, Sundaram Finance, Religare Enterprises and Arvind, have announced the merger of their subsidiaries with the parent in the last three months. Many of the companies had created multiple units in the past to save on taxes but such incentives will cease to exist under GST. “With the implementation of GST, all the tax planning and tax savings structure would be invalid and those subsidiaries which were created for availing the excise duty incentives will be irrelevant,“ said Sachin Menon, head­indirect tax, KPMG. “GST would also curb sc...

While the incometax (IT) department identified 1.8 million people whose cash deposits of banned noted did not appear to be in line with their taxpaying profile for the previous years, only 700,000 have complied with the tax department´s requirement of online verification. Reaching the 1.1 million remaining depositors is going to beadaunting task, say tax officials. The cumbersome process of getting them to explain their large deposits falls on the ITdepartment, which is facingamanpower crunch. The Central Board of Direct Taxes (CBDT) had launched Operation Clean Money, which involved everification of large cash deposits made between November 9 and December 30. The ITdepartment had also issued advertisements asking depositors to check if they were named in the list of 1.8 million people and explain the source their cash deposits. Tax officials extended the deadline for this verification from February to February 15. ITofficials say the department´s current strength of 8,000 ...

The proposal by Central Board of Direct Taxes (CBDT) to use Aadhar database to verify PAN card recipients will need cabinet approval as it involves multiple agencies of the central government, saidaspokesperson for the body. “Currently it takes up to three weeks to verify the applicant. If the Aadhaar database has all the latest details ofaperson including address, finger prints, that can be used for verification of the PAN applicant and reduce the time taken,” Meenakshi Goswami, CBDT spokesperson, said. Goswami said the proposal has not yet been finalised. The CBDT is working on using the extensive Aadhaar database and its eKYC norms to verify those applying for PAN cards. The idea is that it will drastically reduce the time taken to verify fromafew weeks to fivesix days. KYC is know your customer. Business Standard New Delhi,16th February 2017

The Securities and Exchange Board of India (Sebi) is considering rule changes to allow integration of market intermediaries like brokers in the derivatives markets, before integrating the exchanges for allowing commodities and equity/ currency on single platform. The current Sebi regulations do not permit an equity exchange to trade in commodities and vice versa. Separate exchanges, therefore, are required to offer trade in different financial segments. Similarly, market intermediaries like brokers are required to float separate entities for facilitating trade in equities/ currencies and commodities. ASebi source said, “We are weighing integration of brokers and other intermediaries to facilitate trade under one umbrella in all segments and financial instruments. Once, integration of intermediaries is complete, we would consider integration of exchanges.” Market participants have made several representations to the regulator, seeking integration of all segments, especially ...