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The Directorate General of GST Intelligence (DGGI) has busted a racket of fraudulent companies engaged in raising fake tax invoices worth Rs 2.2 billion to avail input-tax credit.  According to the DGGI, searches were conducted at several official as well as residential premises last Thursday in Chennai and Coimbatore in Tamil Nadu and busted the racket and arrested two persons.  "Several incriminating documents, including copies of fake invoices, issued on the letterheads of several firms that existed merely on paper, were seized", an official release issued on Sunday by Additional Director General K Balaji Majumdar said. The modus operandi was that several bogus companies and bank accounts were created using PAN and Aadhaar number of family members and employees, and complex transactions were made without the supply of goods, the release said.  According to the documents seized, fake invoices covering goods worth more than Rs 2.2 billion were issued without supply o...

Kolkata tops list with 617 cancellations, Delhi second with 203 Stepping up oversight over credit companies, the Reserve Bank of India has cancelled the registration of 1,490 non-banking financial companies (NBFCs). These included NBFCs that failed to meet prudential norms and those that voluntarily surrendered registration.  Kolkata tops the list with 617 cancellations, and New Delhi stands at second spot with 203, followed by Mumbai at 190, according to the data provided by the RBI for parliamentary questions (Lok Sabha). These cancellations happened owing to non-compliance with mandatory requirements like minimum net-owned funds (NoF) of Rs 20 million, not submitting statutory returns, and companies not being traced at the addresses they gave.  In some cases, NBFCS surrendered the certificate of registration, the RBI said.  The RBI said NBFCs registered with the regulator were subject to on-site inspection and off-site monitoring through return submission and statu...

The option of “marrying” the insolvency framework with a possible settlement scheme to deal with resolution of debt-laden companies is something that can be considered in the future, said finance and corporate affairs minister Arun Jaitley.  It will be only after the initial batch of bankruptcy cases is cleared, Jaitley said at an event Tuesday. “We have to see if revival is only through the Insolvency and Bankruptcy Code (IBC) or can we revive otherwise,” he said, sounding a note of caution that the various Reserve Bank of India schemes for settling and restructuring debt had not yielded much success. “I think today may not be the right time to go in for this discussion because of the huge rush of companies coming into the insolvency process. But once this rush is off over the next couple of years, business comes back to usual and honest creditor-debtor relationship is restored on account of IBC, a situation may arise when we have to consider a need to marry the two processes,...

The Goods and Services Tax (GST) Council will soon consider a proposal that makes it mandatory for hospitals to bill medicines and hospitalisation charges separately, a move that could help plug any leakage in GST collection from healthcare providers. Such a measure is also seen benefiting consumers as it will make hospital bills more transparent.  Hospital bills typically include charges for both medicines and hospital services. While medicines and consumables attract GST, with some under the maximum retail price (MRP) regime, hospitalisation services usually do not face tax. Tax authorities are worried that hospitals could be charging in-patients for GST on medicines, but the tax may not be reaching the exchequer due to bundling of bill of hospitalisation charges and medication. “There is a thinking that hospitals should have separate bills for medicine and hospital services…This will bring transparency for consumers as well,” an official privy to the proposal told ET. The pr...

Demonetisation hit India’s economic activity in the period following the November 8, 2016, event but the impact had dissipated by the summer of 2017, said a working paper by the US-based National Bureau of Economic Research.  “Our results imply demonetisation lowered the growth rate of economic activity by at least 2 percentage points in the quarter of demonetisation,” said the working paper entitled ‘Cash and the Economy: Evidence from India’s Demonetisation.’ It compared the move’s effect to a monetary tightening equivalent to about two percentage points.  The paper, which has not been peer reviewed, said that India’s economic activity declined 3 percentage points or more in November and December 2016 even though its effects were dispelled over the next few months. It also noted some of the possible longer-term benefits of the measure that saw 86% of the currency notes in circulation being withdrawn.  “We conclude that while the cashless limit may appropriately desc...

Reserve Bank of India (RBI) Governor Shaktikanta Das chaired his first board meeting on Friday, discussing issues ranging from governance at the central bank to liquidity in the financial system.  The board did not arrive at any decision but held extensive discussions on the governance structure in the RBI and the liquidity situation of non-banking financial companies (NBFCs) — two key areas of concern flagged by the finance ministry recently, sources said.  “Good meeting of the RBI central board. Wide-ranging issues discussed,” Das tweeted. On the governance framework, the board decided it would require further examination, according to the RBI’s statement. There was no discussion on the prompt corrective action (PCA) framework, which the government had asked the RBI to consider revising and bring some public sector banks (PSBs) out of it, sources said.  The Board for Financial Supervision, led by the RBI governor, is expected to review the PCA framework in its next ...

Foreign portfolio investors (FPIs) — the largest investor group in the Indian stock market — want the regulator to make life easier for them.  At a meeting with the Sebi chairman this week, about 30 officials and custodians of some of the large offshore funds appealed to the stock market regulator to do away with the rule that requires most offshore funds to be broad-based — having at least 20 investors with each holding not more than 49%.  They have also voiced their concern about the practice where copies of passport, social security numbers, and other national identification documents such driver’s licence of senior management officials and directors of many foreign funds are shared with brokers and intermediaries. The regulator has typically preferred ‘broad-based’ funds to minimise round-tripping of money and trades where FPI vehicles are used by a small club of investors to manipulate stock price. “However, it was argued that since Sebi has directed funds to disclose...

Reserve Bank of India’s projection of lower inflation and assurance on enough liquidity would be positive for banks’ treasury operation which could well boost earnings of many stressed governmentowned lenders, two people familiar with the matter said. These banks sold a net of ?12,036 crore of debt securities on Wednesday, this year’s largest single day sale, capturing gains from falling bond yields. On the same day, the benchmark yield dipped 13 basis points as prices rose. The benchmark paper Thursday yielded 7.43%, the lowest since April 10. The sovereign gauge plunged about 57 basis points past two months. Bond prices are yield move in opposite direction. “It seems, India is heading towards a comparatively lower interest rate scenario,” said Kamal Mahajan, head of treasury and global markets at Bank of Baroda. Banks are likely to post higher profits because of the fact that the hefty provisions against treasury losses made between March and June will now get a scope of reversal...

The Reserve Bank of India (RBI) Tuesday said it would inject Rs 10,000 crore into the system through purchase of government securities on December 6 to increase liquidity. The purchase will be made through open market operations (OMOs).  "Based on an assessment of prevailing liquidity conditions and also of the durable liquidity needs going forward, the Reserve Bank has decided to conduct purchase of ... government securities under open market operations for an aggregate amount of Rs 100 billion on December 6, 2018 (Thursday)," the central bank said. The OMO operation will help ease tight liquidity situation triggered by a series of defaults by group companies of IL&FS.  The eligible participants should submit their offers in electronic format on the RBI Core Banking Solution (E-Kuber) system on December 6.  The result of the auction will be announced on the same day and payment to successful participants will be made on the following day  The RBI also announ...

An expert committee set up by the Securities and Exchange Board of India (SEBI) on Tuesday recommended that the market regulator allow listing of Indian companies on foreign exchanges even without getting listed in India.  Such a framework would help Indian companies to access foreign capital at lower cost, said the report.  Under the current regulations, any company incorporated in India but not listed on an Indian exchange is not permitted to list its shares on a foreign stock exchange. Similarly, companies incorporated outside India cannot directly list their equity shares on Indian stock exchanges.  The committee in its 29-page report also advised the security markets regulator to allow foreign companies to get directly listed in Indian stock exchanges. SEBI has sought comments on the report by December 24  "Listing may be allowed only on specified stock exchanges in 'permissible jurisdictions'," read the report submitted to SEBI.  A "permissible jurisdi...

The Securities and Exchange Board of India (Sebi) has initiated an inquiry into the affairs of pharma major Sun Pharmaceutical Industries on the basis of a whistle-blower complaint, said regulatory sources.  The sources said the market regulator was in receipt of a 150-page letter in which the whistle-blower accused the company of committing corporate governance and tax-related lapses, besides other securities market-related violations.  When contacted, a Sun Pharma spokesperson said, “We have not been contacted by Sebi in this regard.” Sebi, according to sources, also plans to reopen an insider trading case against the company and its promoters that was settled through the consent mechanism.  Sun Pharma, its Managing Director Dilip Shanghvi, and nine others had settled the insider trading probe, paying Rs 1.8 million against the settlement charges in 2017.  While Sebi had not disclosed details of the case, it was probably linked to the acquisition of Ranbaxy by ...