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The country’s largest bank State Bank of India (SBI)announced a steep interest rate cut in several years on Sunday,by reducing its marginal cost of funds based lending rate(MCLR)by 90 basis points(bps)across all maturities. With this cut,SBI has passed on benefit of 200 bps since January 2015 to customers,which is more than 175 bps reduction in the Reserve Bank of India’s(RBI)policy rate cut in the same period. The new rates come into force from today.SBI’s one-year MCLR stands reduced to eight percent from 8.9 percent,while the rate on overnight loans is now 7.75 percent,against 8.65 percent. Banks are flush with funds after the note ban, with Rs.12.4 lakh crore having been deposited with banks till December 10.SBI chairman Arundhati Bhattacharya said, “There is huge liquidity with the bank due to the large flow of deposits. This has driven us to reduce lending rates,which, hopefully,will kick-start credit demand and growth.” Two other public sector lenders — Punjab National B...

The Securities and Exchange Board of India (Sebi) is finalising norms for allowing options trade in commodities. The decision is expected to be announced in a couple of weeks. To finalise basic issues, one more meeting of committee of its commodity market advisory committee is likely. Sources say Sebi wishes to have options shall be in sync with futures trade, and as futures contract sellers have a choice of giving delivery on settlement, this should also apply for commodity options. Recently, some stock market participant members had suggested cash settlement in options. Sources say this has not found favour with many members at committee meetings. Many in the Sebi committee fell that in the absence of traditional institutional players in commodity derivatives, such as banks, financial institutions and specially foreign portfolio investors (who usually act as options sellers and take the most risks), commodity options should have delivery-based settlement. As with stocks, opti...

About Rs.4,313 crore of stashed income has been detected by the Income Tax department after conducting over 1,000 raids and survey operations as part of its country-wide operations against black money hoarders post demonetisation. Official sources said the taxman has detected a total of Rs.4,313.79 crore undisclosed income and seized cash and jewellery worth Rs.554.6 crore as part of these operations, as per the data updated till Thursday. Business Standard New Delhi,31st December 2016

The government signed a pact with its Singapore counterpart on Friday, amending their decade-old tax treaty, gaining taxation rights over capital gains. This is the third double taxation avoidance agreement (DTAA) amended so far this financial year with a zero or low tax jurisdiction. The other two were with Mauritius and Cyprus. According to tax consultants, Mauritius would be the most attractive source of investments into India for debt funds and Singapore for equity investments. Mirroring the revised IndiaMauritius DTAA, the government has some grandfathering provisions (having the old rule continuing to apply for some existing situations, with the new one for all future cases) and a two-year transition benefit to investments from Singapore. The revised pact will take effect from April 1, 2017. For two years from that date, capital gains tax will be imposed at 50 per cent of the prevailing domestic rate. The short-term rate is 15 per cent at present. The full rate will apply fro...

With the validity date ended on Friday for normal exchange of old currency notes, the income tax (I-T) department is working on ‘property index cards’ featuring high value realty transactions in the past three years. They’ve also outlined stringent action against those reportedly having deposited unaccounted old currency in someone else’s bank account. Officials are believed to have directed property dealers and registration authorities to give lists of top property deals in descending order of valuation over three years. “Tackling benami (property officially in someone else’s name, to avoid tax) properties and transactions is one of our key items. On the basis of information on property transactions and bank deposits, we have decided to probe such cases under the newly enforced Benami Transactions Act,” said an I-T official. The Act allows violators to be sentenced to a term of up to seven years in jail. “Benami amounts in a bank account will be confiscated and the violator ...

Wheat acreage has risen by 8 per cent to 292.39 lakh hectares, while sowing area of pulses is up 13 per cent at 148.11 lakh hectares so far in the current Rabi (winter-sown) season, helped by good monsoon and higher support price. However, the area under coverage under paddy and coarse cereals is lower than last year. Business Standard New Delhi,31st December 2016

Prime Minister Narendra Modi's demonetisation may have thrown economic activity out of gear, but the Reserve Bank of India says that it could lead to far-reaching changes in the economy that would help foster a new digital age. “The withdrawal of specified bank notes will impart far-reaching changes going forward,“ RBI Governor Urjit Patel has said in the foreword to the Financial Stability Report, a half-yearly report that diagnoses the health of the financial system and examines t .. “It is expected to significantly transform the domestic economy in due course in terms of greater intermediation, efficiency gains, accountability and transparency through increasing adoption of digital modes of payments, notwithstanding the short -term disruptions in certain segments of the economy and public hardship,“ he said. Although the RBI is the prime actor behind the demonetisation exercise, it is now aggressively batting for the success of the programme. On November 8, Modi had decl...

The Reserve Bank of India (RBI) has proposed the setting up of an ombudsman specifically for non-banking finance companies (NBFCs). This is part of a series of reforms the regulator is planning, it said in its Trends and Progress of Banking in India report released on Thursday. An ombudsman could allow customers to lodge complaints against NBFCs for levying charges without prior notice, non-observance of RBI directives on interest rates, non-acceptance of applications for loans without valid reasons or non-compliance of guidelines on engaging recovery agents. For banks, the ombudsman was appointed two decades ago. According to data available in the report, the 15 regional offices of the banking ombudsman received 95,377 complaints in fiscal 2016 compared to 85,131 the previous year. “We welcome an external mechanism for looking into customer complaints against NBFCs. Currently, each company has a grievance redressal mechanism under the fair practices code,” said Raman Agarwal, ...

The government is proposing a staggered relaxation of existing restrictions on cash withdrawals from banks after 30 December. This is aimed at smoothening the transition as the Reserve Bank of India (RBI) supplies new notes to replace the Rs500 and Rs1,000 notes withdrawn after demonetization, said a person familiar with the development. The withdrawal limit for an individual at present is Rs24,000 per week from a bank and Rs2,500 per day from an ATM. Separately, finance minister Arun Jaitley said robust revenue collections and winter crop sowing suggest that the 50-day demonetization exercise had benefited the economy. He said there has been an increase in both indirect and direct tax receipts. For the eight months ended November, central indirect tax receipts have risen 26.2% and direct tax receipts 13.6%. If this trend continues, then the revised estimates for tax collection this fiscal will exceed estimates in the 2016-17 budget. Mint New Delhi,30th Delhi 2016

Finance Minister Arun Jaitley said on Thursday that for the period between April 1 and December 19, direct tax collections grew at a net rate of 13.6% year-on-year (y-o-y). This is lower than the net y-o-y growth of 15.1% for April 1 to November 30, the data for which were released earlier this month. There were fears with the announcement of demonetisation by Prime Minister Narendra Modi on November 8 the move would lead to a substantial fall in direct tax collections. Jaitley said all the data available, including that of indirect taxes and rabi crop sowing, showed the situation was better than what the critics of demonetisation feared. Jaitley was addressing journalists on the government’s demonetisation drive in New Delhi on Thursday, a day before the December 30 deadline for depositing old Rs 500 and Rs 1,000 notes in banks. “Direct tax figures of income tax till December 19 are now available. If one factors in very large quantum of refunds — because these days refunds are...

The Financial Stability Report (FSR) published by the Reserve Bank of India (RBI) on Thursday raised red flags about the health of the banking sector as lenders struggle with rapid deterioration in asset quality at a time of lower business growth. Overall, India’s financial system remains stable, but the stress on banking sector, particularly on the public sector banks (PSBs) “remain significant”, the central bank noted. “The risks to the banking sector remained elevated due to continuous deterioration in asset quality, low profitability and liquidity,” said the biannual FSR, published by RBI after taking inputs from all financial sector regulators. Business growth in banks remained subdued, particularly in case of PSBs, which lagged their private sector counterparts. System level profit also contracted in the first half of 2016-17. Add to that, the gross non-performing advances (GNPA), or bad debts, ratio of banks increased to 9.1% at the end of September 2016 from 7.8% in M...