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Showing posts from April 2, 2019

Sebi Proposes Regulatory Body for MF Product Distributors

The Securities and Exchange Board of India has proposed a self-regulatory body for distributors and advisors of mutual funds products. The regulator said the distributors of mutual fund products and investment advisers are becoming important players in the market and growing in number.  There are about 1.24 lakh distributors of mutual fund products as on February 28, 2019 and 1,136 investment advisers registered with Sebi as on March 19, 2019. “Therefore, their direct supervision by Sebi would be challenging. Hence, some form of a first-level regulator is required to have an oversight on them,”  Sebi has stated in a discussion paper on Monday seeking public comments by April 21, 2019. “Further, the same (SRO) may be extended to suchother  intermediariesor other market participants as may be notified by Sebi from time to time.” The regulator has sought feedback on whether there should be a single or different SROs for different classes of regulatees and on enhancing the net worth of SRO…

RBI Tweaks NPA Divergence Disclosure Norms for Banks

The Reserve Bank of India (RBI) has made life a little easier for banks by tweaking the rule on bad-loan divergence disclosures. Banks’ disclosure of divergences, mandated by the RBI, aims at improving the transparency in asset classification and preventing under-reporting of bad loans. The central bank on Monday appears to have diluted the rule a bit without compromising the intent. “Some banks, on account of low or negative net profit, are required to disclose small divergences, which is contrary to the regulatory intent that only material divergences be disclosed,” RBI said. It told banks to disclose divergences when the additional provisioning for bad loans assessed by the RBI exceeds 10% of the reported profit before  provisions and contingencies for the reference period, instead of the earlier rule of 15% of the published net profits after tax. There was no change in the second condition: That additional gross NPAs identified by RBI exceed 15% of the published incremental gross N…

RBI Plans One More $5-billion Dollar-Swap

The Reserve Bank of India (RBI) will conduct its second dollar-swap auction in a month to inject $5 billion (about Rs 34,500 crore) of liquidity into the banking system, marking a new trend in balancing the economy’s cash needs and ensuring speedier transmission of policy rate actions. “In order to meet the durable liquidity needs of the system, the Reserve Bank has decided to inject Rupee liquidity for longer duration through long-term foreign exchange Buy/Sell swap in terms of its extant Liquidity Management Framework,” RBI said Monday. The central bank will conduct the auction on April 23. “The US Dollar amount mobilised through this auction would also reflect in RBI’s foreign exchange reserves for the tenor of the swap while also reflecting in RBI’s forward liabilities,” said the RBI note. This is how the swap mechanism would work: High-street banks would sell dollars to the RBI at a dollar-rupee exchange rate fixed by the central bank. Three years later, the banks would buy back t…

FY19 closes on a happy note with record GST collections at Rs 1.06 trillion

The financial year 2018-19 (FY19) ended on a happy note on the goods and services tax (GST) front. At Rs 1.06 trillion, the government has announced the highest monthly collection from GST in March since its roll-out 21 months ago. This is the fourth time in FY19 that the monthly GST collection has crossed the Rs 1-trillion mark, meeting the target. With this, the total GST collected during the year has touched Rs 11.77 trillion, still nearly Rs 75,000 crore short of the initial annual expectation. Even so, the GST mop-up, together with the direct tax collection of Rs 11.5 trillion (against a Budget target of Rs 12 trillion), may somewhat ease the government’s worry about a steep tax shortfall for now. Analysts said the latest numbers would help the government move closer to the fiscal deficit target of 3.4 per cent of the country’s gross domestic product (GDP) set for FY19. “The monthly average of GST revenue during FY19 is Rs 98,114 crore, which is 9.2 per cent higher than 2017-18. T…