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The Reserve Bank of India (RBI) on Tuesday lowered its benchmark interest rate by a higher-than-expected 50 basis points to a four-year low, seeking to ease borrowing costs and stimulate economic growth by taking advantage of record-low consumer price inflation. Governor Raghuram Rajan reduced the repo rate, at which the central bank lends to commercial banks, to 6.75% from 7.25% in the fourth cut since the start of January. The repo rate has been cut by a total of 125 basis points this year. One basis point is one-hundredth of a percentage point. Ten bank economists and executives polled by Mint had expected a cut of no more than 25 basis points. The higher-than-expected rate cut should silence critics who believe RBI’s insistence on inflation control above all else has come at the cost of economic growth, which slowed to 7% in the three months ended June from 7.5% in the preceding quarter. State Bank of India, the country’s largest lender, responded swiftly with a 40 basis ...

The RBI on Tuesday raised the debt limit for foreign investors to up to 5% of the current outstanding amount of bonds by March 2018, which will help in additional inflows of about Rs.1.2 lakh crore. The central bank also added that the limits for foreign portfolio investment in debt securities will henceforth be announced or fixed in rupee terms. The RBI has also allowed FPI investment into state development loans (SDLs), as part of a broad strategy to open up domestic markets. “Additionally, there will be a separate limit for investment by FPIs in SDLs, to be increased in phases to reach 2% of the outstanding stock by March 2018. This would amount to an additional limit of about Rs.50,000 crore by March 2018,” the RBI release said. The increase in limits will be announced every half year in March and September and released every quarter. The RBI also permitted the issuance of rupee bonds in offshore markets with a minimum maturity of 5 years. There shall be no restriction ...

Strict norms will kick in after the expiry of the threemonth-long ‘compliance window’ to declare assets in foreign shores ends Wednesday (September 30) even as the government ruled out any extension of the scheme. The penalties include a hefty 120% of the tax amount due and a jail term of up to 10 years for holding undisclosed foreign assets. The three-month compliance window scheme provided protection against prosecution by declaration of the assets and paying 60% tax and penalty. The Central Board of Direct Taxes has already warned that all “consequences” of law will follow and the taxman will go after black money hoarders who do not declare their illegal funds by Wednesday. According to a top government source, till September 23, not more than 30 entities had reported their foreign investments which totalled about Rs.2,500 crore. On a comparative scale, a tax amnesty scheme called the Voluntary Disclosure of Income Scheme (VDIS) in 1997 had fetched over Rs.10,000 crore. Th...

Minimum Wage, Maximum Damage Issue of minimum wage has been a contentious one for BPOs wanting to expand to non-metros The government's plan to push the business process outsourcing (BPO) industry to expand into non-metro and rural areas could trip on a long-standing issue -varying minimum wages across states. “The challenges come from domestic BPO margins being very low, and managing attrition, which is as high as 80% in the sector,“ said Sonal Arora, assistant vice-president at recruitment firm TeamLease Services. While there are no special minimum wages prescribed by the government for BPOs, a domestic BPO would come under the classification of a commercial establishment, said Arora, and since BPOs are no longer offering only voice services, companies incur significant cost in training, on-boarding and hiring people for specialised skills. The issue of minimum wage has been a contentious one for BPOs wanting to expand to non-metro cities, because they feel the minimum ...

If Bengaluru police intelligence wing has its way, then new recruits of startups and IT firms will need to undergo a compulsory background check from the police.This, police believe, is necessary to keep a check on terrorist activities. Apparently, the Ministry of Home Affairs through the Intelligence Bureau (IB) has told Karnataka Police that some engineers with a terrorism-linked past have infiltrated into Bengaluru's IT industry. “We plan to send a proposal to Police Commissioner and the DGP requesting them to issue a circular to all startups and IT companies in Bengaluru. We'll need to check their recruitment lists to do a background verification for new employees,“ DCP (Intelligence) Maheshwarappa S told ET. As of now, such verification is mandatory only for cab drivers and school staffers. In the calendar year up to Sep 21, the city police received only 13,824 applications for verification from the private sector, and the police are not happy about the number. Cit...

The Securities and Exchange Board of India ( Sebi) on Tuesday exempted the Centre from the takeover code obligations for its investment in Dena Bank, Bank of India and Corporation Bank. The Central government plans to infuse Rs.407 crore in Dena Bank, Rs.2,455 crore in Bank of India and Rs.857 crore in Corporation Bank. The infusion of capital, part of the government’s ‘Indradhanush’ initiative, would have triggered an open offer as the government’s stake in these banks would have increased by more than five per cent. In Dena Bank, the government’s stake is likely to increase 5.25 per cent - from 59.75 per cent to 65 per cent. In Bank of India, the government’s shareholding might raise from 64.43 per cent to 70.13 cent - an increase of 5.7 per cent. For Corporation Bank, the stake increase could be 5.78 per cent to 69.11 per cent. According to Sebi norms, when entities that hold 25 per cent or more equity in a company acquire an additional five per cent or more, they have to ma...

Seek relaxation of order restricting Aadhaar usage in PDS and LPG subsidies The Securities Exchange Board of India ( Sebi) and the Reserve Bank of India ( RBI) on Tuesday moved the Supreme Court for modification of the apex court’s order on Aadhaar, issued in August. The two regulators sought relaxation of the order, which stated the unique identity card should not be insisted upon except for public distribution scheme ( PDS) items such as food and kerosene, and for subsidised liquefied natural gas ( LPG). Considering a large number of similar applications, including that of the Centre and the governments of Gujarat and Jharkhand, the court set the hearing of the matter on October 6. According to Sebi, Aadhaar is useful in various ways for the development of the securities market. It works as a an easy and simplified mode of completion of know- your- client (KYC) requirement, while onboarding a client by any registered intermediary in terms of prevention of money laundering nor...

The Securities and Exchange Board of India, which took charge of regulating the commodities derivatives market on Monday , said it is open to allowing foreign portfolio investors to trade in this segment. The capital market regulator also wants to introduce options trading in commodities. “There is no reason why participants like banks and foreign portfolio investors that are not allowed today should not be allowed,“ said Sebi chairman UK Sinha at an event in Mumbai to mark the merger of Forwards Market Commission(FMC) -India's commodity market regulator-with Sebi that was attended by finance minister Arun Jaitley . “There is no reason why options trading should not be allowed in commodity derivatives market“. Sinha declined to comment on when Sebi planned to allow foreigners to trade in commodities derivatives on local bourses. “I would like to mention that our immediate priority will be to take stock of the and ensure that there is trust in the market about the way regulato...

The government plans to impose heavy penalty on importers dealing in mobile phones, electronic items and garments who are evading valueadded tax (VAT). An analysis of 1,000 importers has shown a mismatch between information provided by the Customs department and VAT returns filed by the traders. A senior official said these importers had a turnover of Rs.2,000-5,000 crore. A number of dealers have been issued notices to furnish details of their returns. The trade and taxes department entered into an agreement with Customs to share details of such traders. “A number of importers in Delhi import goods from a number of countries and to evade tax they don’t file returns. Those who do so don’t mention the volume of goods they have imported in order to evade tax. We have entered into an agreement with the customs department to share information. They provided us details of the top 1,000 importers and we are scrutinising their records,” said a senior Delhi government official. The o...

Round tripping, changing shell company names, becoming NRIs are favourite methods to avoid declaring the cash The promoter of a Delhi-based, mid-sized, listed company has a Rs.700-crore problem. The cash is in various overseas accounts but the businessman has no plans of declare it before the black money deadline of September 30. Instead, he plans to invest it in the Indian capital markets by opening new intermediary or shell companies in the coming year or so. He's not alone. Many promoters of listed companies are working overtime with chartered accountants to devise ways of utilising unaccounted funds. These include shutting old intermediary companies, starting new ones with fresh records, transferring funds to newer safe harbours and round-tripping funds into the Indian capital markets through participatory notes and even applying for non-resident Indian (NRI) status. “Despite government assurances, many promoters of listed firms fear that if they declare their unaccou...

The Insurance Regulatory and Development Authority of India ( Irdai) said for a public issue of shares by health, reinsurance and non- life insurers, they will consider the applicant company’s overall financial position, its regulatory record and its capital structure post issue, prior to giving approval. In its draft guidelines on issue of capital by non- life insurers, reinsurers and standalone health insurers, Irdai said it may direct an Indian insurance company transacting the non- life insurance business or standalone health insurance business or reinsurance business to go for public issue if the circumstance so warranted. The period for which the applicant company has been in the non- life insurance business or in standalone health insurance business or in reinsurance business, will also be taken into consideration. Its record of policyholder protection will also be looked into. Business Standard, New Delhi, 28th Sept. 2015