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NSE co-location: EY, ISB audits fail to cut ice with SEBI panel The Securities and Exchange Board of India’s (Sebi’s) technical advisory committee (TAC) is not satisfied with the forensic report findings submitted by the National Stock Exchange (NSE) on co-location, said a regulatory official. According to him, Sebi’s expert panel is of the view that the report findings are not matching with the evidences gathered by them. The panel has submitted their views to the market watchdog and has called for an independent probe. In November 2017, the NSE had submitted two separate audit reports to Sebi, prepared by EY and the Indian School of Business (ISB), Hyderabad, relating to the co-location matter. The NSE entrusted EY to carry out a forensic audit into cash markets, currency derivatives, and interest rate futures platforms. ISB’s audit was to determine whether certain brokers made any undue profits by getting preferential access to the exchange’s platform.Sources say the audit...

Cryptocurrency exchanges face the red flag In some cases, RoC is seeking an undertaking The banking system is not the only one keeping a safe distance from the existing cryptocurrency business players. Opening virtual currency exchanges has become equally tough, especially when words like bit, crypto, coin, virtual are part of a company name. The Registrar of Companies (RoC), under the Ministry of Corporate Affairs, has stopped registering cryptocurrency exchanges under the Companies Act, 2013. In some cases, the RoC is asking for an undertaking from software development- or information technology-related companies that it will not deal with cryptocurrencies such as bitcoins, it is learnt. “I tried to register my company in December, but the RoC didn’t accept my request. The company’s name had the term ‘bitcoin’ and the RoC said it wouldn’t support it,’’ an executive with an upcoming cryptocurrency exchange said.Cryptocurrency exchanges are a platform for buying and selling virtu...

Sebi plans to open consent doors for serious violations The Securities and Exchange Board of India (Sebi) is broadening the scope of the consent mechanism to reduce the number of cases it is handling. According to sources, the regulator is planning to allow serious offences such as insider trading, front running, or fraudulent and unfair practices to be settled under the mechanism. Sources privy to the development said Sebi would take a fresh look at the pricing formulae to decide the settlement amount under consent. Currently, the formulae prescribed by Sebi have too many variables, making the process ambiguousThe regulator is working on simple formulae to arrive at settlement fees, sources say, adding that the new consent framework will be introduced in less than two months During the last board meeting, the Sebi chief had acknowledged the need for tweaking the consent rules.“We are revisiting the settlement norms and have started rewriting certain regulations,” Ajay Tyagi, c...

Ministry Wants SEZ Tax Incentives to Continue In the Budget 2016-17, Finance Minister Arun Jaitley had stated that the income tax benefits to new SEZ units would be available to only those units which commence activity before March 31, 2020. The commerce ministry has pitched for continuation of tax incentives being enjoyed by units in special economic zones (SEZs) with a view to boost shipments and job creation, a government official said. In a letter to the finance ministry, the department of commerce has also asked for removal of minimum alternate tax on SEZs. In the Budget 2016-17, Finance Minister Arun Jaitley had stated that the income tax benefits to new SEZ units would be available to only those units which commence activity before March 31, 2020.The commerce ministry wants removal of this sunset clause as it would negatively impact growth of these zones, the official added. According to industry experts, the clause that indicates the date in advance on which tax incen...

GST composition scheme may come under reverse charge mechanism to curb evasion Worried by apparent goods and services tax (GST) evasion, India is likely to bring the composition scheme under the reverse charge mechanism right away. The government will move an amendment to the GST law in the budget session to introduce an enabling provision to prescribe the mechanism where it deems necessary. The GST Council has already approved about 40 changes to the law. The law will be changed to introduce an enabling provision for you to bring in reverse charge mechanism wherever you want," said a person aware of deliberations in the GST Council. "The thinking is that at least in the case of composition scheme the reverse charge should be done." Under the reverse charge mechanism, a person receiving goods or services collects the GST levied and deposits the tax with the government. The provision, which is suspended for now, was only meant for an unregistered entity supplying ...

Sebi online filing system stumps investors and intermediaries The registration process on an average according to market participants has doubled or become three times as against the earlier timeline of a mont The Securities and Exchange Board of India or Sebi’s online filing and registration system for intermediaries to usher in ease of business has had a mixed effect. The registration process on an average according to market participants has doubled or become three times as against the earlier timeline of a month. This is due to inefficiencies in the recently installed information technology systems which is also leading to double filings once online and then manually, said four people with direct knowledge of the matter including lawyers, consultants, advisors, fund managers on condition of anonymity. The market intermediaries and consultants are planning to write to Sebi on the issues they are facing during the registration processes.In an emailed response to Mint querie...

RBI, govt may give banks more time to switch to IndAS With less than three months to go before the deadline, bankers believe implementing the IndAS accounting norms will be a challenge The government and the Reserve Bank of India (RBI) may postpone the implementation of new accounting standards for banks because of the legislative changes and additional capital requirements the process would entail, according to three senior officials familiar with the matter. Banks and non-banking financial companies are due to switch to Indian Accounting Standards (IndAS) from 1 April 2018. They currently follow Indian generally accepted accounting principles (GAAP) standards. Other corporate entities started complying with IndAS with effect from 1 April 2016. “The implementation of IndAS for public sector banks requires an amendment to the Banking Regulation Act. The schedule in BR Act relating to financial statement disclosures needs to be changed to the IndAS format,” said one of the thr...

GST Council cuts rates on 80 items 29 goods, 54 services to become cheaper; move towards simpler return-filing process Barely a fortnight to the Budget, the Goods and Services Tax (GST) Council on Thursday cut rates on 83 employment-oriented goods and services. This will hit the exchequer by Rs 10-12 billion annually.The Council is moving towards one return form, though a final decision in this regard is yet to be taken. The government also got the enabling power to have a single registration for services, a key demand of many players including those in the banking sector. This may be exercised later for specific services. Briefing reporters after the meeting, Finance Minister Arun Jaitley said the rates were rationalised for 54 categories of services and 29 goods. These include secondhand vehicles, diamonds, and precious stones, LPG supplied to domestic users by private players, information sought under the Right to Information Act, exploration of oil, 20 litre packaged potabl...

Markets shoot up on bank FDI hopes HDFC Bank m-cap touches Rs 5 trillion Indian market son Thursday recorded new highs with the Sen sex consolidating above 35,000 and the 50 share Nifty closing above 10,000 Banking shares led the gains for a second day, this time on hopes that the government would raise the foreign direct investment (FDI) ceiling for the sector to 100 per cent. A day earlier, they had jumped after the Centre announced a cut in additional borrowing to Rs 200 billion After rallying as much as 425 points, the Sensex settled 178.5 points, or 0.5 per cent, higher at 35,260 and the Nifty closed at 10,817, up 28.5 points, or 0.26 per cent.The markets came off their highs as some investors booked profits judging recent gains as excessive, said experts. The broader market in fact saw widespread losses. The BSE Mid- and Smallcap indices fell 1.6 per cent and 2 per cent, respectively. The breadth of the market also remained negative with over three shares declining for ...

Matching Invoices May Soon Be taxpayers'Job The onus of matching invoices to claim input tax credit under the goods and services tax (GST) regime may soon fall on the taxpayers instead of the IT the GST Network( GS TN ), if Info sys Chairman Nan dan Nile kan i’ s (pictured) recommendations, made to the Council on Thursday, are implemented .” According to the presentation, the onus of matching invoices will fall on the supplier and buyer rather than on the GSTN. This will be a much simpler process. There will be no filing of returns, butonly uploading of invoices,” saida senior government official.It will be a system where the seller will upload the invoice and the buyer will acknowledge it. The government is keen to bring back the suspended invoice-matching system after a fall in GST revenue raised concerns over tax evasion. The GST revenue collections fell to Rs 808.08 billion in November, the lowest since the roll-out of the indirect tax in July last year. Jammu and Kashm...

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 ...