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Showing posts from April 19, 2017

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RBI permits banks to invest up to 10% in REITs, InvITs

The Reserve Bank of India (RBI) on Tuesday permitted banks to invest up to 10% of the unit capital of a real estate investment trust (REIT) or infrastructure investment trust (InvIT). Banks’ exposure to REITs and InvITs will be within the overall ceiling of 20% of the net worth permitted for direct investments in shares, convertible bonds/ debentures, units of equity-oriented mutual funds and venture capital funds. “Banks should put in place a board approved policy on exposures to REITs/ InvITs which lays down an internal limit on such investments within the overall exposure limits in respect of the real estate sector and infrastructure sector,” RBI said.

Mint New Delhi, 19th April 2017

RBI wants banks to make more provisions even for good loans

The Reserve Bank of India (RBI) on Tuesday advised banks to consider setting aside higher provisions even for good loans in stressed sectors. The advisory means the central bank is worried that banks have not fully recognised their bad loans, said experts.

Indian banks are sitting on a toxic loan pile of at least Rs 7 lakh crore, or 9% of all bank credit.

The RBI specifically redflagged the telecom industry, and asked bank boards to review their exposure to the sector by June 30 and consider making provisions at higher rates “so that necessary resilience is built in the balance sheets should the stress reflect on the quality of exposure to the sector at a future date.” This means banks should consider making higher provisions immediately for the telecom sector.

Under current rules, most standard assets attract a provision of 0.4%. The few exceptions include credit to commercial real estate – which has a 1% provision, and residential real estate (0.75%). However, RBI hasn’t specified the…

Simpler Credit Rules on Way for Poor Households

Proposal includes lending of up to Rs 1 lakh per family without collateral at lower interest rates

The government is redrawing a micro-credit programme to help pull rural households out of poverty. The proposal is to lend up to Rs 1 lakh per family in the next threefive years, with the loans coming collateral-free and with subsidised interest rates.

“We have simplified the process for accessing loans ... We are getting into the details of livelihood each house can undertake so that the money can be lent accordingly,“ said rural development secretary Amarjeet Sinha.

Nearly 8.5 crore poor households identified in the Socio Economic and Caste Census will be linked to the plan by 2019.

The government wants to double bank linkages to lend Rs 60,000 crore per year for creation of livelihood for deprived rural households by 2019. The aim is to reduce their dependence on local money lenders and microfinance companies who charge usurious interest rates as against 11% by banks. Under the new propo…

FPIs Want Block Deal Rules Relaxed

A body representing foreign portfolio investors (FPIs) has written to the Securities and Exchange Board of India (Sebi) seeking relaxation of rules related to block deals. Asia Securities Industry & Financial Markets Association (ASIFMA) has asked for extension of `time window' for block deals and relaxation of `order limit.' Block deal is a trade with a minimum quantity of 5 lakh shares or minimum value of Rs 5 crore, executed through a single transaction, on a special window. The window is open for only 35 minutes during morning trading hours. The transaction price of a share ranges from +1% to -1% of the previous day's closing or the current market price. These transactions take place on a delivery basis.Usually, block deal happens when two parties agree to buy or sell securities at an agreed price and inform the stock exchange.

“We understand the Sebi is not in favour of introducing more flexibility for block trades, we continue to maintain that this is a major iss…

India Inc seeks leeway on capital gains tax proposal

Industry players write to CBDT seeking exclusion of inter-se transfers, other transactions

India Inc has sought exemptions and more clarity on the government’s proposal to levy capital gains tax on shares acquired through non-payment of the securities transaction tax (STT).

Sources said the Central Board of Direct Taxes (CBDT) had received over a dozen recommendations from shareholders seeking widening of the negative list proposed in the draft notification.

The CBDT earlier this month proposed only three scenarios under which capital gains tax would be levied. However, one of the conditions, that listed shares not purchased from stock exchanges would be liable for tax, has created confusion among market players.

Inter-se promoters’ transfer among group entities; direct allotment of shares such as qualified institutional placement; acquisition of shares by conversion of a debenture or loan; and acquisition of shares through gifts are some of the transactions that industry players have as…

Guidelines on compliance with Accounting Standard (AS) 11

Guidelines on compliance with Accounting Standard (AS) 11 [The Effects of Changes in Foreign Exchange Rates] by banks - Clarification RBI/2016-17/281
DBR.BP.BC.No.61/21.04.018/2016-17 April 18, 2017 All Scheduled Commercial Banks
(excluding Regional Rural Banks) Madam / Dear Sir, Guidelines on compliance with Accounting Standard (AS) 11 [The Effects of Changes in Foreign Exchange Rates] by banks - Clarification Please refer to circulars DBOD.No.BP.BC.76/21.04.018/2004-05 dated March 15, 2005 and DBOD.BP.BC.No.76/21.04.018/2005-06 dated April 05, 2006 on the captioned subject. 2. It has been observed that banks have been recognizing gains in profit & loss account from Foreign Currency Translation Reserve (FCTR) on repatriation of accumulated profits / retained earnings from overseas branch(es) by treating the same as partial disposal under AS 11. 3. The matter has been examined taking into consideration, inter alia, the views of the Institute of Chartered Accountants of India. It is …

Most states to pass GST Bill by May end

Rajasthan, Bihar call special sessions on April 24; Assam will also have a similar one by May

Rajasthan and Bihar have called special sessions of their respective Assemblies to pass the State Goods and Services Tax (SGST) Bills on April 24. Assam, too, is likely to have a special session of its Assembly to pass the Bill by the second week of May, said a senior official of the state government.

Telangana was the first state to pass the SGST Bill. Its Assembly approved it unanimously last Sunday.

Rajasthan and Assam have Bharatiya Janata Party (BJP) governments. The parties and alliances at the helm in Bihar and Telangana are not part of the BJP-led National Democratic Alliance. That these two states have been proactive about getting the Bill passed underscores Union Finance Minister Arun Jaitley’s repeated claim that negotiations over the GST rules and laws were carried out in an atmosphere of consensus.

All 29 states and two of the Union territories that have legislatures — Delhi and Pud…