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Cabinet clears changes to plug loopholes in insolvency code Govt to amend insolvency and bankruptcy rules via ordinance, will block promoters deemed wilful defaulters from regaining control of firmsThe Union cabinet on Wednesday approved amendments to the Insolvency and Bankruptcy Code (IBC) to plug potential loopholes in the new corporate turn around regime and to ensure rescued companies remain in reliable hands. Finance minister Arun Jaitley said changes to the IBC have been proposed through an ordinance that’s awaiting presidential assent.One of the changes proposed is to ensure that promoters deemed wilful defaulters do not eventually end up taking control of the company again. The exact nature of the amendment and its scope will be known only after the text of the ordinance is available after the president gives his assent, a person familiar with the development said on condition of anonymity. “Some changes have been proposed in the Insolvency and Bankruptcy Code. Since t

Lenders plan to send more companies to NCLT Tightening of the Insolvency and Bankruptcy Code (IBC) to keep willful defaulters from bidding for assets has given lenders a short in the arm.Banks, armed with the new rule, are gearing up to send more accounts to the National Company Law Tribunal (NCLT), especially those that have gone through the strategic debt restructuring (SDR) process in the past two and a half years but failed to find a resolution. Since the Reserve Bank of India (RBI) issued the SDR guidelines, banks have converted debt into equity in 20 companies but managed to divest stake only in one company— Adhunik Power.“The SDR scheme failed as there are no buyers for the stressed assets Promoters are still running the companies but with lower debt burden.Bankers have not found any takers after they converted their loans into equity,” said a lender.Of the total 26 companies, Alok Industries, Monnet Ispat and Electrosteel Steels are on the first list sent to the NCLT.

TASK FORCE TO DRAFT NEW DIRECT TAX LAW The government has brought back the main author of the now junked Direct Taxes Code (DTC) as a convenor of the task force to review the decade sold provisions of the IncomeTax Act and draft a replacement. The government has, however, already implemented many provisions of the draft DTC, such as the General Anti Avoidance Rules (GAAR) and on Place of Effective Management. The government has constituted a six member panel to take forward Prime Minister Narendra Modi´s call for replacing the ITAct,aweek after it notified an overhaul of the goods and services tax (GST). The panel has been asked to submit report within six months. Arbind Modi, member (legislation) of the Central Board of Direct Taxes (CBDT), is convenor of the task force. Chief Economic Advisor Arvind Subramanian will be a permanent special invitee.Rajiv Memani, chairman and regional managing partner, India region, EY, who was named member of the task force, said,"The gove

GST Sops for Digital Payment Push GST Council may discuss proposal tomorrow, has option of incentivising merchants & customers A year after demonetisation, India is getting ready to give digital payments yet another push. It could consider providing incentives in the goods and services tax (GST) regime for payments that are settled electronically. The GST Council meeting on Friday is likely to consider a proposal in this regard, a senior government official told ET. “There is a thinking that digital transactions need to be incentivised .The council will look at what could be done,” the person said.The council could take up the proposal along with steps to cut GST on some items from the top 28% rate besides easing the compliance burden for businesses. As far as digital payments are concerned, the council has the option of incentivising merchants and customers. Under the proposal, benefits in terms of credit or exemption could be provided within central and state GST to enc

GST woes for branded apparel persist Branded apparel manufacturers and retailers are yet to overcome the impact of the new indirect tax regime. The textile chain was in limbo after the goods and services tax (GST) was introduced because of the cascading tax burden and now consumer sentiment has been impacted.Falling exports have made matters worse.The September quarter results of big players have reflected this. Branded apparel products that cost more than Rs 1,000 attract 12 per cent and those below this 5 per cent.As a result, consumers are shifting towards lowpriced apparel.Established players have to comply with the new tax mechanism as they don´t deal in cash. A part from that, branded apparel firms had to purchase from their bulk consumers ahead of the date of the GST introduction, July 1, to avoid the high tax levy. Asaresult, they have some additional stocks. Rahul Mehta, president, Clothing Manufacturers Association of India, said, “Weak consumer sentiment, sharply falling

Consumer Auto Cos Take Rural Road to Growth FMCG, appliances and auto cos report healthy sales in Jul-Sept, much ahead of urban areas Purchases of consumer products and automobiles in rural India picked up pace during July-September, outstripping the rate in cities, as a good monsoon lifted farm income Rural sales of FMCG products by both value and volume — the number of products sold — increased 13% during the quarter from a year earlier, according to Kantar Worldpanel, the consumer insights arm of WPP, the world’s biggest advertising company. It was the fastest pace of growth in over three years. In contrast, the urban market expanded 4% by value and 1% by volume during this period, the researcher said This is the second consecutive quarter of double-digit growth in the rural FMCG market, which helped to boost volumes in the overall fast-moving consumer goods sector by 7% compared with about 4% a year earlier. The rural market accounts for more than a third of all consumer

PSU banks line up to raise funds after recapitalisation plan Moody s rating upgrade After the govt announced the bank recapitalisation plan on 24 October, PSU banks have announced plans to raise more than Rs13,000 crore through QIPs as against a total of Rs8,419 crore raised in the last four year Public sector banks are queueing up to raise funds from the equity market, especially through qualified institutional placements (QIPs) against the back drop of improved investor sentiment on account of the government’s bank recapitalisation plan and a recent upgrade of India’s sovereign rating by Moody’s Investors Service. After the government announced the Rs2.11 trillion bank recapitalisation plan in October, PSU banks have announced plans to raise more than Rs13,000 crore through QIPs since 24 October as against a total of Rs8,419 crore raised in the last four years. On Tuesday, Bank of Baroda’s board approved fund raising up to Rs6,000 crore through QIP or rights issue, the bank