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The experience of banks with IBC cases so far has been mixed with banks taking an average haircut of 50% With the Supreme Court striking down the Reserve Bank of India's (RBI's) February 12, 2018, circular, the resolution of default accounts, which were filed in various tribunals under the Insolvency and Bankruptcy Code (IBC) after the circular was released, will get delayed further. For erring promoters, it comes as a shot in the arm as they will get an opportunity to resolve their accounts with the banks.  “The SC order puts into question everything the banks have done pursuant to the February 12 circular, including any case filed for insolvency proceedings. It gives all of them (default accounts) another lease of life, but the RBI needs to clarify under what guidelines these debt resolutions will be considered," said Sanjiv Krishnan, partner & leader (deals), PwC India. It would appear that all the restructuring mechanisms such as S4A (Scheme for Sustainable Str

The Securities and Exchange Board of India has proposed a self-regulatory body for distributors and advisors of mutual funds products.  The regulator said the distributors of mutual fund products and investment advisers are becoming important players in the market and growing in number.   There are about 1.24 lakh distributors of mutual fund products as on February 28, 2019 and 1,136 investment advisers registered with Sebi as on March 19,  2019.  “Therefore, their direct supervision by Sebi would be challenging. Hence, some form of a first-level regulator is required to have an oversight on them,”  Sebi has stated in a discussion paper on Monday seeking public comments by April 21, 2019. “Further, the same (SRO) may be extended to suchother   intermediariesor other market participants as may be notified by Sebi from time to time.”  The regulator has sought feedback on whether there should be a single or different SROs for different classes of regulatees and on enhancing the net wo

The Reserve Bank of India (RBI) has made life a little easier for banks by tweaking the rule on bad-loan divergence disclosures.  Banks’ disclosure of divergences, mandated by the RBI, aims at improving the transparency in asset classification and preventing under-reporting of bad  loans. The central bank on Monday appears to have diluted the rule a bit without compromising the intent.  “Some banks, on account of low or negative net profit, are required to disclose small divergences, which is contrary to the regulatory intent that only  material divergences be disclosed,” RBI said. It told banks to disclose divergences when the additional provisioning for bad loans assessed by the RBI exceeds 10% of the reported profit before   provisions and contingencies for the reference period, instead of the earlier rule of 15% of the published net profits after tax.  There was no change in the second condition: That additional gross NPAs identified by RBI exceed 15% of the published increment

The Reserve Bank of India (RBI) will conduct its second dollar-swap auction in a month to inject $5 billion (about Rs 34,500 crore) of liquidity into the  banking system, marking a new trend in balancing the economy’s cash needs and ensuring speedier transmission of policy rate actions.  “In order to meet the durable liquidity needs of the system, the Reserve Bank has decided to inject Rupee liquidity for longer duration through long-term  foreign exchange Buy/Sell swap in terms of its extant Liquidity Management Framework,” RBI said Monday.  The central bank will conduct the auction on April 23.  “The US Dollar amount mobilised through this auction would also reflect in RBI’s foreign exchange reserves for the tenor of the swap while also reflecting  in RBI’s forward liabilities,” said the RBI note. This is how the swap mechanism would work: High-street banks would sell dollars to the RBI at a dollar-rupee exchange rate fixed by the central bank. Three  years later, the banks would

The financial year 2018-19 (FY19) ended on a happy note on the goods and services tax (GST) front. At Rs 1.06 trillion, the government has announced the  highest monthly collection from GST in March since its roll-out 21 months ago.  This is the fourth time in FY19 that the monthly GST collection has crossed the Rs 1-trillion mark, meeting the target.  With this, the total GST collected during the year has touched Rs 11.77 trillion, still nearly Rs 75,000 crore short of the initial annual expectation. Even so, the GST mop-up, together with the direct tax collection of Rs 11.5 trillion (against a Budget target of Rs 12 trillion), may somewhat ease the  government’s worry about a steep tax shortfall for now. Analysts said the latest numbers would help the government move closer to the fiscal deficit target  of 3.4 per cent of the country’s gross domestic product (GDP) set for FY19.  “The monthly average of GST revenue during FY19 is Rs 98,114 crore, which is 9.2 per cent higher than

The government is considering a scheme to refund taxes imposed on India’s exports to the US that will suffer loss of competitiveness once the concessional duties enjoyed under the Generalised System of Preferences (GSP) are withdrawn.  A Rebate of State Levies (ROSL) kind of scheme, which would refund unrebated taxes that are included in the price of goods, would incentivise exporters and ensure India’s shipments do not drop. The unrebated taxes would be refunded through the drawback route. “Leather, textiles, some lines of organic chemicals, and nuclear reactors and boilers are some sectors that are likely to face a disadvantage. The government may consider ROSL for these sectors,” an official in the know of the development said.  While most Indian exports are incentivised through the Merchandise Exports from India Scheme, the programme has been disputed by the US for violating the World Trade Organization (WTO) rules.  ROSL is compliant with international trade norms and found fa

The Reserve Bank of India (RBI) is likely to reduce the cost of money for the second time in as many months as mounting concerns over a global economic slowdown, particularly in the US, and its impact on the emerging markets make investors rather wary of fresh investments into capital assets.  According to an ET survey of 26 market participants, an overwhelming majority expect a quarter percentage point reduction in the repo, or the rate at which banks borrow short-term money, when the central bank concludes its monetary policy review Thursday. The repo is now set at 6.25%. “Global economic conditions point to a synchronised growth slowdown, dampening oil prices,” said Gaurav Kapur, chief economist at IndusInd Bank. “This in turn will strengthen RBI’s rate-cut call as inflation is unlikely to spring a negative surprise over the next couple of quarters. RBI will focus more on ensuring future liquidity support to make the transmission of rate cuts more effective.”  Two participants,