RBI monetary policy review: States may need to get their loans rated

RBI monetary policy review: States may need to get their loans rated

If the state development loans (SDL) are rated, the margin requirement would be set at 1 per cent lower than other SDLs for the same maturity buckets

In its June monetary policy, the Reserve Bank of India (RBI) reduced the margin requirement for government securities (Gsecs) and state development loans (SDL) mortgaged by banks to access liquidity from the central bank. The central bank said the margin requirement for government bonds would be in the range of 0.5 per cent to 4 per cent, depending on residual maturity. For SDLs, the margin requirement would be 2.5 per cent to 6 per cent.

The rule was to have a margin requirement of 4 per cent for Gsecs and 6 per cent for SDLs. Furthermore, if the SDL is rated, the margin requirement would be set at 1 per cent lower than other SDLs for the same maturity buckets.The segmentation would help differentiate the market risk across securities, the RBI said. The RBI had earlier said it planned to let the SDLs be valued by finances of a state government. But now, the central bank said the relaxations in margin requirement would incentivise the state governments to get a public rating for SDLs.

In a bid to make the SDLs more market-oriented, the RBI said they should be valued at the price at which they have been traded in the market.In case of non-traded state government securities, the valuation will be based on the state-specific weighted average spread over the yield of the central government securities of equivalent maturity, as observed at primary auctions, the RBI said. Besides, state governments can now have special drawing facility at repo rate minus 200 basis points, against repo rate minus 100 basis points earlier. The states maintain two funds with the RBI to repay their obligations at the time of maturity of their bonds. The rate cut will incentivise states to use the funds, even more, RBI said.

The central bank also asked banks to spread their first quarter valuation losses in the bond portfolio over four years. It had allowed doing so in the past two quarters too, but most banks had decided to take a hit in the quarter itself. In an important move, the central bank allowed more participants to short-sell Gsecs. Currently, only banks, primary dealers and certain well-managed Urban Cooperative Banks (UCBs) are permitted to undertake the short sale of transactions. Besides, there are various limits on shorting. “With an objective to add depth to the Gsecs and repo markets, there is a proposal to liberalise the eligible short sale participants’ base as well as relax the entity-wise and security category-wise limits for short selling in Gsecs,” the RBI said.

The central bank also allowed primary dealers limited access to foreign exchange related transactions in order to help their foreign portfolio investor clients. Moreover, the central bank said it will enforce a regulation that will help curtail abusive market practices. Currently, foreign exchange and fixed income investors abide by the code of conducts formulated by their own associations. The central bank wants to introduce regulations, “in line with the best global practices to prevent abuse in the markets regulated by the RBI.”

Margin Requirement

The central bank said the margin requirement for government bonds would be in the range of 0.5% to 4%, depending on residual maturity
For SDLs, the margin requirement would be 2.5-6%
The rule was to have a margin requirement of 4 % for G-secs and 6% for SDLs
If the SDL is rated, the margin requirement would be set at 1 per cent lower than other SDLs for the same maturity buckets
The segmentations would help differentiate the market risk across securities, the RBI said

The Business Standard, New Delhi, 07th June 2018

New income tax slab and rates for new tax regime FY 2023-24 (AY 2024-25) announced in Budget 2023

Basic exemption limit has been hiked to Rs.3 lakh from Rs 2.5 currently under the new income tax regime in Budget 2023. Further, the income tax slabs in the new tax regime has been changed. According to the announcement, 5 income tax slabs will be there in FY 2023-24, from 6 income tax slabs currently. A rebate under Section 87A has been enhanced under the new tax regime; from the current income level of Rs.5 lakh to Rs.7 lakh. Thus, individuals opting for the new income tax regime and having an income up to Rs.7 lakh will not pay any taxes The income tax slabs under the new income tax regime will now be as follows: Rs 0 to Rs 3 lakh - 0% tax rate Rs 3 lakh to 6 lakh - 5% Rs 6 lakh to 9 lakh - 10% Rs 9 lakh to Rs 12 lakh - 15% Rs 12 lakh to Rs 15 lakh - 20% Above Rs 15 lakh - 30% The revised Income tax slabs under new tax regime for FY 2023-24 (AY 2024-25) Income tax slabs under new tax regime Income tax rates under new tax regime O to Rs 3 lakh 0 Rs 3 lakh to Rs 6 lakh 5% Rs 6

Jaitley plans to cut MSME tax rate to 25%

Income tax for companies with annual turnover up to ?50 crore has been reduced to 25% from 30% in order to make Micro, Small and Medium Enterprises (MSME) companies more viable and also to encourage firms to migrate to a company format. This move will benefit 96% or 6.67 lakh of the 6.94 lakh companies filing returns of lower taxation and make MSME sector more competitive as compared with large companies. However, bigger firms have shown their disappointment since the proposal for reducing tax rates was to make Indian firms competitive globally and it is the large firms that are competing globally. The Finance Minister foregone revenue estimate of Rs 7,200 crore per annum for this for this measure. Besides, the Finance Minister refrained from removing or reducing Minimum Alternate Tax (MAT), a popular demand from India Inc., but provided a higher period of 15 years for carry forward of future credit claims, instead of the existing 10-year period. “It is not practical to rem

Don't forget to verify your income tax return in August: Here's the process

An ITR return needs to be verified within 120 days of filing of tax return. Now that you have filed your income tax return, remember to verify it because your return filing process is not complete unless you do so. The CBDT has reduced the time limit of ITR verification to 30 days (from 120 days) from the date of return submission. The new rule is applicable for the returns filed online on or after 1st August 2022. E-verification is the most convenient and instant method for verifying your ITR. However, if you prefer not to e-verify, you have the option to verify it by sending a physical copy of the ITR-V. Taxpayers who filed returns by July 31, 2023 but forget to verify their tax returns, will get the following email from the tax department, as per ClearTax. If your ITR is not verified within 30 days of e-filing, it will be considered invalid, and may be liable to pay a Late Fee. Aadhaar OTP | EVC through bank account | EVC through Demat account | Sending duly signed ITR-V through s

CA Online

Search This Blog