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The capital market regulator has told credit rating agencies — some of which were blindsided by the aura and size of IL&FS — to review borrowers as soon as their bond prices crash, and even place such securities on ‘rating watch’ if prices continue to languish.  Baffled by the rapid downgrades of IL&FS debt paper — from triple-A to ‘D’ (or, default) in less than two months — Sebi wants rating agencies to take cues from the market in evaluating bond issuers. The strategy to track widening bond spreads — the difference between a corporate bond yield and that of a government bond of similar maturity — was emphasised by Sebi officials at a recent meeting with large rating agencies, two persons familiar with the development told ET.  The move assumes significance with the financial market currently displaying a sudden risk aversion to debt securities of businesses like non-banking finance companies whose importance and valuation had risen in the last two years as banks ...

Market regulator Securities and exchanges board of India (Sebi) is examining Friday’s sharp moves in shares of Dewan Housing Finance Corp., Yes Bank Ltd and other lenders for possible trading irregularities, people with knowledge of the matter said.  Sebi is looking into whether brokers and investors colluded during the sharp selloff and subsequent recovery in financial shares, the people said, asking not to be identified due to the sensitivity of the matter.  The rout, which deepened Monday, has erased about $13 billion from the value of a gauge of financials. The regulator is examining data from India’s two stock exchanges on which parties were buying and selling financial shares, and on the sequencing of the trades, the people said.  The market regulator may launch a full investigation if it uncovers evidence of wrongdoing, the people added. A Sebi spokesman didn’t respond to a message and phone calls seeking comment.  The move comes after Indian authorities a...

The government Monday extended by a fortnight till October 15 the deadline for filing Income Tax Return (ITR) and audit report for financial year 2017-18.  The Central Board of Direct Taxes (CBDT) had received representations from stakeholders seeking extension of the last date for filing of returns by taxpayers whose accounts have to be audited. The CBDT extends the due date' for filing of ITRs as well as reports of Audit (which were required to be filed by the said specified date) from September 30, 2018 to October 15, 2018 in respect of the said categories of taxpayers, the CBDT said in a statement.  However, there shall be no extension of the due date for the purpose of section 234A (Explanation 1) of the I-T Act, 1961 pertaining to interest for defaults in furnishing return, and the assessee shall remain liable for payment of interest as per provisions of section 234A of the Act, it added. The Business Standard, 25th September 2018

Overseas investors buying rupee bonds issued by Indian entities will not need to pay tax on their interest income, the government said on Monday, as it attempts to encourage capital inflows and support the rupee.  The Central Board of Direct Taxes (CBDT), the apex direct tax body, said in a statement that interest payable to a nonresident or a foreign company regarding offshore rupee bonds issued from Monday till 31 March 2019 will be exempt from tax, and hence, no tax will be deducted on interest payment at source.  The CBDT statement said legislative changes will be proposed in due course. NTPC Ltd and Housing Development Finance Corp Ltd have sold rupee bonds to raise funds from abroad.  It helps the borrower avoid currency risks which are borne by the investor.  The ongoing rupee depreciation has hurt industries using high quantities of imported raw materials.  The domestic price of auto fuel, which is linked to international dollar price of the commodit...

Company directors who have not authenticated themselves have written to the secretary to the Ministry of Corporate Affairs (MCA), seeking more time to complete the process.  They said the MCA 21 site was not working and because of that they could not complete their know your customer (KYC) norms.  The MCA is deactivating the registrations of 2 million directors because they did not update their KYCs.  In 60 days, 1.2 million directors have completed their KYCs. The remaining will be disqualified unless they update their KYC and pay a penalty to the ministry. There were 3.2 million active director identification numbers (DINs) with the Registrar of Companies. The ministry is planning to track down each director who has not completed his or her KYC. Stating that the ministry will not extend the time to update KYC, sources said it was the directors’ fault and not the ministry’s.  “If they have not done it, they deserve to pay a fine,” an official said, adding the sy...

Economists feel the government measure to address the current account deficit and rupee depreciation may improve sentiment and were just the limited response that was needed, but some felt they suggest panic on the part of the government.  The government on Friday announced a slew of measures to bring additional capital inflows of $8-10 billion to arrest rupee depreciation and address the underlying problem of high current account deficit.  “We view the government’s guarded response as appropriate because India’s macro fundamentals are in a much better shape today than in 2013 – higher growth, stable inflation and fiscal commitment - and do not necessitate a knee-jerk reaction,” Sonal Varma of Nomura said in a research note. Upasna Bhardwaj, senior economist at Kotak Mahindra Bank, was not sure how much capital flow will come from these measures but agreed that no panic reaction was needed.  “Though we need to be vigilant of rupee depreciation, there is no need to pre...

The rupee may retrace up to 3% of its lost ground by the end of the calendar year, helped by the five-pronged strategy that the government announced to prop up the free-falling local currency, market participants expect.  A majority of the respondents in an ET snap poll predicted the local unit to see some signs of gains this week following the announcement. But that could be short-lived, as they expect the rupee to swing both sides in a wide range through the year amid continuing global uncertainties, and even hit a new low.  A meltdown in the Turkish lira and Argentine peso is clouding the prospects of emerging market investment, with investors seeking safe-haven assets. Foreign investors pulled out more than ?49,000 crore since January from India’s equity and bond markets, even as the rupee lost about 11% to the dollar to be one of the worst performing emerging market currencies this year.  Overseas Investors Wait for Details,  The local currency hit a record ...

The government has started the process of de-activating the identification numbers of nearly 2.1 million directors of companies as they failed to comply with KYC norms, according to a senior official.  The Director Identification Numbers (DINs) -- a unique number allotted to individuals who are eligible to have directorship on the boards of registered companies -- are being de-activated. They will be re-activated after a fee payment of Rs 5,000 along with the requisite form and the individuals concerned might also face action. The latest move by the Corporate Affairs Ministry also comes at a time when the government has intensified the crack down on shell companies, which are suspected to be conduits for illicit fund flows.  In June, the ministry decided to carry out KYC (Know Your Customer) process for all directors, including those who have been disqualified. The last date for complying with the new norms by way of submitting form 'DIR-3 KYC' without fee ended on Septemb...

Securities and Exchange Board of India (Sebi) has directed the NSE to keep four senior officials, served show-cause notices (SCN) in the co-location case, out of action. Sources said these four key managerial personnel (KMP) will have to remain out of the bourse’s “sensitive” and “confidential” matters until the probe is complete. The move is to ensure a fair trial in the colo case, which is nearing conclusion.  “These KMP have also been directed to recuse themselves from key decisions of the NSE. Further, they have been told not to participate in any of the core activities,” said a regulatory official. Meanwhile, the NSE has filed another consent application with Sebi based on fresh SCNs served on July 4. Notices have also been served to about 20 individuals. These include Ravi Varanasi, the exchange’s chief of business development, and Suprabhat Lala, senior vice-president (regulatory and investor services cell).  Sebi had, in March, returned the NSE’s previous consent...

India’s antiprofiteering officials will look into complaints alleging that many consumer goods companies have not fully passed on a recent reduction in the goods and services tax on their products to consumers.  According to the complaints, some makers of refrigerators, televisions, washing machines and water heaters haven’t reduced the prices of their products to reflect the cut in GST to 18% from 28%. However, white goods companies said the entire benefit has been passed on. “We have received many complaints... These will be looked into as per the process,” said a senior official with the National Anti-Profiteering Authority, the government entity that ensures traders don’t realise unfair gains by charging high prices from consumers in the name of GST.  The GST Council, which administers the tax, cut the rate for a host of white goods to 18% from 28% on July 21. Companies were directed to affix stickers with the new prices on old stock to ensure that the tax cuts are pas...

Amidst Centre may be gradually adding gold equivalent to the sale of sovereign gold bonds, says an analyst  Rajesh Bhayani. The Reserve Bank of India (RBI) is becoming consistent in adding gold to its foreign currency reserves.  In July the central bank added 6.8 tonnes, the highest monthly accretion after 2009. This came at a time when the central bank spent more than $25 billion defending the falling rupee. After buying 200 tonnes from the International Monetary Fund in 2009, the RBI made its first token purchase in December last year with 300 kg and then added more than 2.2 tonnes in March this year.  In 2018-19, in four months, it added 12.7 tonnes, of which 11.2 tonnes was purchased in June and July, according to the data released by the World Gold Council.  Analysts tracking the international gold reserves say the RBI’s action shows it is buying gold and adding it to its reserves without disturbing markets. The need was felt because Russia, Turkey and even ...