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Resolution plans under IBC may need approval of fewer lenders. The government is debating whether to lower the approval threshold for resolution plans under the Insolvency and Bankruptcy Code (IBC) in a move aimed at preventing too many insolvent companies from going into liquidation.More than 75% of creditors currently have to agree to a resolution plan, implying that just over 26% can reject it and force a company into liquidation. The government feels liquidation should be the last resort and is considering whether such plans can be approved by a two-thirds majority or even a simple majority."There is a need to relook at the current majority requirement. Just 26% members cannot take a company to liquidation," said a senior government official, who didn't want to be named. "We are seeing it as an issue." Many companies that have gone into liquidation could have continued to function under a less rigorous regime, some in the government feel.According to

Finance ministry decides not to recreate an omnibus development bank The word from North Block just before the Budget is that the finance ministry has decided not to recreate an omnibus development bank. Instead with at least one international rating agency having pushed up India’s credit rating, it will push state-owned and supported entities to take advantage of the favourable conditions to raise more money from the market For this purpose, the ministry has cleared a proposal from at least one line ministry to create a specialised financing arm quite like the Indian Railway Finance Corporation. When state-owned institutions raise money from the markets on their own steam to finance their capital needs, those qualify as off-Budget borrowings. Prime Minister Narendra Modi and Finance Minister Arun Jaitley are convinced that even for financing the needs of the soft infrastructure sectors, the same strategy could be applied. This would keep the government borrowing within prudent

NSE to finalise list of commodity derivatives soon As it awaits Sebi guidelines on universal exchanges, NSE has said it will finalise its list of commodity derivatives products to launch on its platform in next 1-2 months. The leading bourse also said it has made the required technological changes for such trades. The National Stock Exchange (NSE), which is looking to offer trade in commodity derivatives such as energy and metals, is currently engaging brokers and other market participants for shortlisting such products with an aim to bring in a diversification in the segment. On December 28 last year, the markets watchdog Securities and Exchange Board of India (Sebi) had announced that from October 2018, the country will have a unified exchange regime wherein stock exchanges will be allowed to offer trading in commodities derivatives. Detailed guidelines are awaited. "Our technology platform is ready for commodity derivative trading. Whatever technological changes were

Govt may offer more income tax deductions to those who invest in its infra projects The current limit for income tax deductions is Rs2 lakh, which may be raised to Rs2.5 lakh but only for those who invest in government infrastructure projects The finance ministry is considering offering higher income tax deductions on investments made by taxpayers in securities used to raise funds for government infrastructure projects, two government officials familiar with the matter said.The current limit is Rs2 lakh and discussions are on to increase it to at least Rs2.5 lakh, but the extra deduction will be available only on investments made in government infrastructure projects. “Discussions are on to give relief to taxpayers in the form of higher tax deduction. The higher deduction will be for investing in infrastructure projects in the form of bonds or through equity-linked savings schemes,” said one of the officials cited above, requesting anonymity. But these investment routes are lik

RBI warns banks about crypto risks, wants higher scrutiny The Reserve Bank of India (RBI) has warned lenders about cryptocurrencies, telling them to step up scrutiny of financial transactions by companies and exchanges involved in the trade of bitcoins and similar digital tender, said two people aware of the matter. While the central bank stopped short of directing banks to desist from dealing with such entities, the formal communication is expected to lead to a near freeze as no lender would want to get on the wrong side of the regulator, they said. Both RBI and the government have issued warnings on bitcoin previously. The central bank's note asks banks to understand how such currencies work before dealing with such companies, sources said."RBI has told us to carefully evaluate businesses of these cryptocurrencies, but the wording of the RBI letter does not prohibit us in dealing with bitcoins," said one of the persons. "The regulator's remarks raise qu

Centre proposes fixed-term labour contracts The Union labour ministry recently issued a draft notification that would allow fixed-term employment across sectors and also approved moves by some states to amend the Industrial Disputes Act so that factories employing up to 300 workers can close or retrench labour without seeking government approval. The draft notification on fixed term contracts is part of the Industrial Employment (Standing Orders) Central (Amendment) Rules, 2018, and enables companies to hire workers for short term assignments and terminate their services when projects are completed. Once notified by the Centre, states can amend their rules accordingly. The draft notification has been uploaded on the ministry's website for stakeholder comments. Under fixed-term employment, workers are entitled to statutory benefits available to a permanent worker in the same factory, including work hours, wages, and allowances. However, employers need not give notice to fixe

FinMin asks PSU banks to be in hot pursuit of bad loans The finance ministry has directed state-run banks to set up a separate stressed asset management and recovery team that will be responsible for stringent recovery follow-up. While most top public sector banks already have set up teams to manage bad loans, market watchers believe that the finance ministry's directive will push midsized and small PSU banks to take bad loan recovery seriously. "Most state-run banks already have stressed asset management teams who only focus on recovery from such assets but, yes, we agree that a focused approach is required and the government push should help in bringing in that discipline among lenders," a PSU bank official said on condition of anonymity. Experts also said a separate vertical for managing bad loans would accelerate resolution of the bad loans mess and help recovery, which could lead to write back of provisions in the next two years, boosting profits."These