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In the iconic Bollywood movie, Sholay, a number of policemen have been featured. There is the bumbling jailor who relies on weak market intelligence and ends up burning his fingers. Then, there is the stereotypical Bollywood cop who arrives after all the action is over in the last scene.  In the recent furore over fancy structures used by mutual funds for promoter financing, market regulator Securities and Exchange Board of India (Sebi), unfortunately, displays similar weaknesses. To start with, its market intelligence comes across as extraordinarily poor, if not absent. Reports say the regulator is now concerned about undue risks taken by mutual funds, although there was no inkling of any concerns of the kind anytime in the past. Likewise, while market participants are now calling for better disclosures of such financing structures by listed companies, Sebi is yet to make a statement on this. J.N. Gupta, managing director, Stakeholders Empowerment Services (SES), says: “Sebi will

The finance ministry has sought from the Reserve Bank of India (RBI) Rs 27,380 crore that was withheld by the central bank towards risks and reserves in the previous years, said sources. The RBI had retained  Rs  13,190 crore towards risks and reserves during 2016-17. It increased to  Rs  14,190 crore in 2017-18. Together, retained amount is  Rs  27,380 crore.  The ministry has requested the RBI to provide an interim surplus for the current fiscal on the analogy of the previous financial year and transfer the amount withheld from the surplus of 2016-17 and 2017-18, sources said. Earlier this month, Economic Affairs Secretary Subhash Chandra Garg had said the government expects  Rs  28,000 crore from the RBI as interim dividend during the current fiscal. The RBI, which follows July-June financial year, has already transferred  Rs  40,000 crore in the current fiscal.  If the central board of the RBI approves transfer of  Rs  28,000 crore requested by the government as interim dividen

Many well-heeled Indians who own stocks and properties abroad or are beneficiaries of offshore trusts may come under the glare of the income tax (I-T) department for failing to spell out their ‘indirect investments’.  Indirect investments are the nextlevel investments — or, holdings in other overseas companies — by the entity in which the resident Indian is a stakeholder. Consider an individual holding 15% equity interest in an unlisted offshore firm (A) in Dubai, which in turn is a shareholder in three US companies (B, C and D).  According to the department, indirect ownership in B, C and D has to be disclosed in the income tax return along with the investment in A. The tax office, sources said, has asked a few “high-profile individuals” to explain why they did not disclose their indirect investments because under the law the Indian resident is the ultimate beneficial owner (UBO) of all the companies. Non-disclosure of information could attract a penalty of at least ?10 lakh; and,

The Reserve Bank of India on Thursday cut the key interest rate by 25 basis points to 6.25% and shifted the policy stance to ‘neutral’ terming it a ‘decisive’ act to promote investment and consumption in an economy facing weak demand. The move may open the doors to a lower interest rate cycle based on receding inflation, though it could only be for a short term going by past trends.  After claiming success in tackling price pressures since inflation targeting was adopted about two years ago, the Monetary Policy Committee voted unanimously on Thursday for a shift in stance to ‘neutral’ from ‘calibrated tightening’ and lowered inflation forecast. The central bank also brought nonbanking finance companies (NBFCs) on a par with manufacturing companies with regard to capital requirements for banks that lend to them. The credit rating of an NBFC will now determine how much capital the bank has to set aside, making thousands of crores of rupees available for lending to a sector buffeted b

The government may soon find a solution to address the tax concerns of startups, Central Board of Direct Taxes (CBDT) chairman Sushil Chandra said.  “Very shortly, we will find out a solution on the basis of the suggestions we have received. We will have to decide which startups are real startups and how they can be exempted from Section 56 (2) of the Income Tax Act,” he said at an Assocham function here on Thursday.  Various startups had raised concerns over the notices sent to them under this section to pay tax on angel investments. The CBDT chief said any startup recognised by the Department for Promotion of Industry and Internal Trade is exempt from Section 56 (2) and the tax notices sent to startups have been stayed.  Last week, officials from the department, along with tax department officials, met startup industry representatives to hear their suggestions.  Section 56 (2) provides that the amount raised by a startup in excess of its fair market value would be deemed income fro

The Reserve Bank of India said it would intensify its scrutiny of nonbanking finance companies to ensure better compliance and financial strength, but did not indicate an asset-quality review like the one carried out on banks.  NBFCs showed high growth taking advantage of the poor financial health of several public sector banks but the recent default by the group firms of non-bank lender IL&FS raised alarm and called for a reality check. Former chief economic advisor Arvind Subramanian suggested asset quality review (AQR) for these lenders to fully measure the extent of the hidden stress in the system.  “Like Raghu (former governor Raghuram Rajan) did an AQR for the banks, we need to an asset quality review for the NBFCs,” he told ETNow in December.  RBI data showed that NBFCs cumulatively had loans assets worth ?3.42 lakh crore at the end of September with industry accounting for more than half of total credit extended by them, followed by retail, services and agriculture. T

The central bank on Thursday said it is examining the possibility of bringing payment gateway operators under its direct regulatory ambit, a move that industry players said will make the digital payments ecosystem more secure and stable.  “We are considering the feasibility of directly regulating these payment operators…given their growing importance in the payment systems of the country, we deem such a step to be important,” Reserve Bank of India governor Shaktikanta Das said during his monetary policy speech. The RBI said it will soon publish a draft of the regulatory guidelines for stakeholder consultations. Mint Road and New Delhi have been in talks for some time now to come up with a comprehensive regulatory solution for the burgeoning payment systems in the country, which is riding the growth of ecommerce and m-commerce transactions. Meanwhile, issues ranging from the fees that businesses pay for accepting digital payments to grievance redressal for failed transactions and ev