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Improve pricing of risk-based loans, RBI tells banks Deputy governor Vishwanathan calls for better standards of underwriting, timely enforcement of loan covenants Banks in India must improve pricing of loans based on risk assessment, a skill that would have helped them avoid non-performing assets, N.S. Vishwanathan, deputy governor of the Reserve Bank of India, said on Thursday. He also asked banks to improve underwriting standards by writing strong loan covenants—agreements with the borrowers—as well as enforcing them on time. Indian banks are currently sitting on a stressed asset pool of over Rs10 trillion.“Risk-based pricing of loan would need fair assessment and understanding of the risk involved, rather than merely relying on collateral and/or guarantees obtained from stakeholders including equity holders. Banks should charge interest rate that is commensurate with the risk involved in the projects that are being financed,” he said at an event. In many instances, risk is ...

 Rupee slips on rising oil, trade deficit concerns The rupee was one the worst performing emerging market currencies in the world on Tuesday as rising oil prices and worsening trade deficit, which hit a three-and-a-half year high in December, spooked investors. The local unit lost nearly 1% to the US dollar and yields on old benchmark bonds surged to about 22-month high to 7.56% after RBI deputy governor Viral Acharya warned banks to manage interest rate risk on their own. In terms of spot returns, the rupee ranked 23, yielding -0.65% this calendar year, just ahead of Turkish Lira among emerging market, Bloomberg data show. "Poor deficit number, coupled with rising oilBSE 1.46 % prices, is leading to a short-term panic in the markets," said Ashish Vaidya, head of markets for India at Singapore's DBS Bank. "If this trend sustains for a few days, we need to be on a high alert as markets are expected to turn volatile." The rupee closed at 64.04 to a dollar,...

Black money: Govt heat on 120,000 firms  The government on Tuesday said it had decided to strike off the names of 120,000 more companies from the official records for various noncompliances as part of its continuing fight against the black money menace. Nearly 226,000 firms have been deregistered and around 309,000 directors associated with these entities have been disqualified. Minister of State for Corporate Affairs PPChaudhary, who chaired the review meeting of the actions taken with respect to deregistered firms last week, has directed officials to expedite action against the companies that are to be struck off the records. These moves are part of larger efforts to curb illicit fund flows. According to the release, 1,157 cases had been filed with the National Company Law Tribunal (NCLT) for restoration of deregistered companies. “Of these cases, the NCLT had given orders for considering restoration of 180 companies, of which 128 firms have been restored by the registr...

  10 states join eway bill platform; GSTN starts trial run   As many as six more states, including Gujarat, Haryana, and Bihar, on Tuesday joined the government´s centralised eway bill system for interstate road transportation of goods in the goods and services tax (GST) GST regime, taking the total to 10. Under the GST rolled out from July last year, interstate movement of goods beyond 10 km, with a value of Rs 50,000 and above, will mandatorily require eway bill from February 1. Four states —Karnataka, Rajasthan, Uttarakhand, and Kerala —had already started using eway bill. On Tuesday, six more states —Haryana, Bihar, Maharashtra, Gujarat, Sikkim, and Jharkhand —have started the trial runs kick started by the GST Network (GSTN). “Other states are also likely to join us soon in this initiative. Transporters and other taxpayers will not be required to visit any tax office or check post under this system and the eway bill can be generated electronically,” GSTN Chie...

 CII urges govt to bring oil, natural gas under GST The Confederation of Indian Industry (CII) has proposed including all petroleum products in the goods and services tax (GST) at the earliest.The GST was rolled out on July 1 last year, and it subsumed most of the central and state indirect taxes into a single tax. However, petroleum products like crude oil, natural gas, diesel, petrol, and aviation fuel are out of the GST ambit. In its suggestions to the Centre, the CII has said till such time as this is done,CForms should be continued to avoid a high tax incidence on these products. Though the understanding is that the previous value added tax and central sales tax (CST) rules would continue to apply to the excluded products, the related sectors continue to incur huge GST impacts on all inputs without any setoff, as sales of crude oil and natural gas are outside the purview of the GST and are subject to the existing Oil Industry Development Board cess, CST Act, and state ...

GST council may cut rates of 70 items 40 services in the list for last revision before Budget A fortnight ahead of the Union Budget, the Goods and Services Tax (GST) Council is likely to take up rationalisation of rates of about 70 items, of which at least 40 are services. Amendment in rules may also be taken up to simplify filing and plug some of the loopholes. A fitment committee of officers has made these recommendations to the Council, which will meet on Thursday. With the aim to boost struggling agriculture and rural economy, and encourage clean energy, the Council is expected to rationalise rates of agriculture implements and unconventional fuel buses. It is the last Council meeting before Finance Minister Arun Jaitley presents his last full Budget on 1 February, before general elections in 2019. “Around 40 to 50 services will be taken up for a rate revision in the Council meeting. These are services that were earlier exempt but were taxed under the GST regime. They are...

RBI can´t always bail out Banks should not be surprised when there is a sharp rise in bond yields. Rather, they should “know and understand this risk rather well,” said Reserve Bank of India (RBI) Deputy Governor Viral Acharya (pictured) to the association of bond investors, most of them being from banks.“Interest rate risk of banks cannot be managed over and over again by their regulator,” Acharya said on Monday, delivering as tern message to banks. “The regulator, in the interest of financial stability, is caught in such situations, between a rock and a hard place, and often obliges.” However, by taking advantage of the dispensation regularly, efficient price discovery in the government securities (GSec) market and effective market discipline on the GSec issuer was not happening. “Nor does it augur well for developing a sound risk management culture at banks.” The comment comes at a time when banks have been lobbying with the central bank to allow spreading their treasury l...

Sebi mulls review of graded surveillance measures to improve transparency The Securities and Exchange Board of India (Sebi) is reviewing the process to bring companies under the graded surveillance measure (GSM) with a view to improve transparency, said two people in the know. GSM aims to tackle the surge in stock prices of companies with poor fundamentals or low market capitalisation witnessing abnormal price rises, and which are not supported by a significant improvement in financial or operational performance. A little more than 700 firms have come under GSM since it was introduced in February last year. Experts reckon the criteria to select companies under GSM are not spelt out clearly and the mechanism is an overtly aggressive way of dealing with companies with poor fundamentals that are often targeted by fraudsters. “In the current form, GSM is dangerously vague and hatched in secrecy," said Sumit Agrawal, partner, Suvan Law Advisors. “Price discovery should be a f...

SEBI  to recover Rs 70 bn by auctioning 11 PAN card Clubs properties in Feb Pancard Clubs mobilised Rs 70.35 billion from 51,55,516 investors from 2002-03 to 2013-14 via many holiday schemes Looking to recover over Rs 70 billion of investors' money, markets regulator Sebi has lined up as many as 11 properties of Pancard Clubs and its late CMD for an online auction next month at a total reserve price of Rs 2.53 billion. This is in addition to 11 properties of the company that were auctioned in December as well as on January 10 and their combined reserve price was Rs 5.52 billion. In a notice, the Securities and Exchange Board of India (Sebi) said that SBI Capital Markets will auction 10 properties of Pancard Clubs and one property of its late CMD, Sudhir Moravekar on February 14 at a reserve price of Rs 2.53 billion. The properties listed for sale include a four star hotel, land parcels and office space in Goa, Maharashtra, Rajasthan and West Bengal. Sebi said the bidders sh...

Single GST form likely for service providers Service providers such as telcos, banks, insurers and airlines may need to file just one centralised form in respect of the goods and services tax (GST), which will substantially ease the compliance burden on service providers with a multi-state footprint. The GST Council is expected to consider on January 18 significant relaxation in the law and procedures, including a centralised registration facility to make compliance easier. It will also consider changes to input tax credit regime to allow credit for tax paid on rent a cab services, benefiting IT and ITES companies such as Infosys, Wipro and Genpact. "Council has a heavy duty agenda lined up.A number of issues dealing with compliances are likely to be taken up," said a government official privy to the deliberations. A panel set up by the GST Council has suggested modifications in the provisions of the law and relaxations in some procedures to ensure ease in compliance....

GoM on GST Network to meet on Wednesday A group of ministers( Go M ), headed by Bi h ar Deputy Chief MinisterS us hil Kumar Mo di, will meet on Wednesday to look into the technical issues faced by the goods and services tax network( GS TN ). This will be the sixth meeting of the Go M after being setup in September2017. The panel is likely to take stock of the functioning of the GS TN and also review the tasks assigned to the information technology(IT) behemoth Infosys for stream lining user experience on the portal. In 2015, Infosys won a Rs13.8 billion deal for developing and running the G ST N’ s back end office. TheGSTN, the IT backbone and portal for real time taxpayer registration, migration, and tax return filing under the G ST, had run into a snag when the first deadline for filing GS TR -3 B returns approached, forcing the Centre to extend the lastdate The Business Standard, New Delhi,  16th January 2018