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The Reserve Bank of India (RBI) has proposed that the merchant discount rate (MDR or charge) on debit card transactions be rationalised on the basis of turnover. Transactions up to Rs.2,000 do not attractacharge but this is to end on March 31. The central bank issued draft guidelines on its website that propose the MDR be “on the basis of merchant turnover, rather than present slabrate based on transaction value”. Besides, there should be differentiated MDR for the government and QRcode related transactions. Also, “there isaneed to differentiate MDR between acquiring infrastructure involving physical terminals, including mobile pointofsale, or mPOS, and digital acceptance infrastructure models such as QR code”. RBI proposes that whereamerchant is willing to pay upfront for the card acceptance infrastructure, the MDR has to be on the lower side. The draft proposes different categories of merchants, based on the categories proposed in the coming goods and services tax (GST). For example

With an aim to boost digital payments, the government has said that all matters related to promotion of digital transactions will be handled by the ministry of electronics and information technology (Meity).According to an order issued by the Cabinet Secretariat, “Promotion of digital transactions including digital payments” has been delegated to the IT Ministry. On Thursday, President Pranab Mukherjee gave his approval to amend the ‘Government of India, Allocation of Business Rules, 1961’ to assign the new role of accelerating digital payments to the ministry. “Promotion of digital transactions including digital payments has been formally assigned under the purview of Meity. The digital payments mission is expected to be set up shortly by the ministry,” said an official from IT ministry, who did not wish to be named. The IT ministry is tasked with promotion of e-governance for empowering citizens, promoting inclusive and sustainable growth of the electronics and information technolo

To make real estate and infrastructure investment trusts more attractive for investors, regulator Sebi has notified norms allowing mutual funds to invest their money in such entities. The move comes after Sebi in its board meeting in January permitted mutual funds to invest in real estate investment trusts (REITs) and infrastructure investment trusts (InvITs). A mutual fund is permitted to invest only up to 5% of its net asset value in units of a single issuer of alternative securities. The maximum allowed investment in alternative instruments by a single fund will be capped at 10%. The cap will not be applicable in the case of index fund or sector—or industry—specific scheme. “A mutual fund may invest in the units of REITs and InvITs... No mutual fund under all its schemes shall own more than 10% of units issued by a single issuer of REIT and InvIT,” Sebi said in a notification dated 15 February. The move is part of Sebi’s effort to get more number of investors into REITs and InvITs

Capital markets regulator Securities and Exchange Board of India has allowed foreign investors to acquire shares through primary markets in depositories and clearing corporations. Prior to this, foreign investors could acquire shares of depositories and clearing corporations only through secondary market. The move comes at a time when Central Depository Services (India) Ltd is preparing to launch its initial public offering. Mint New Delhi,17th Febryary 2017

The Cabinet on Wednesday approved the proposed merger of State Bank of India (SBI) and five subsidiaries — a combination that will create the first Indian lender to rank among the world’s top 50. State Bank of Bikaner and Jaipur (SBBJ), State Bank of Hyderabad (SBH), State Bank of Mysore (SBM), State Bank of Patiala (SBP) and State Bank of Travancore (SBT) will merge with the country’s largest bank, widening the gap between SBI and the No. 2 lender, HDFC Bank Ltd. The Cabinet approved the merger proposals submitted by the boards of these banks, finance minister Arun Jaitley said at a press briefing, adding that a proposal to merge Bharatiya Mahila Bank (BMB) with SBI is still under consideration. “This merger will lead to far greater operational efficiency and synergy of operations. When the cost of operations comes down, the cost of funds will come down,” he said. “SBI will become a very large bank but not merely from a domestic point of view. “We are considering the proposa

PREPARING FOR NEW REGIME Experts say subsidiaries created to avail of excise duty incentives will be irrelevant, and mergers will help reduce compliance work Various companies are rushing to merge their subsidiaries with themselves ahead of the implementation of Goods and Services Tax (GST) to reduce tax, operational and administrative costs and to eliminate multiple legal entities. At least 100 companies, such as Asian Paints, Sun Pharma, L&T, BPCL, Sundaram Finance, Religare Enterprises and Arvind, have announced the merger of their subsidiaries with the parent in the last three months. Many of the companies had created multiple units in the past to save on taxes but such incentives will cease to exist under GST. “With the implementation of GST, all the tax planning and tax savings structure would be invalid and those subsidiaries which were created for availing the excise duty incentives will be irrelevant,“ said Sachin Menon, head­indirect tax, KPMG. “GST would also curb sc

While the incometax (IT) department identified 1.8 million people whose cash deposits of banned noted did not appear to be in line with their taxpaying profile for the previous years, only 700,000 have complied with the tax department´s requirement of online verification. Reaching the 1.1 million remaining depositors is going to beadaunting task, say tax officials. The cumbersome process of getting them to explain their large deposits falls on the ITdepartment, which is facingamanpower crunch. The Central Board of Direct Taxes (CBDT) had launched Operation Clean Money, which involved everification of large cash deposits made between November 9 and December 30. The ITdepartment had also issued advertisements asking depositors to check if they were named in the list of 1.8 million people and explain the source their cash deposits. Tax officials extended the deadline for this verification from February to February 15. ITofficials say the department´s current strength of 8,000