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RBI rushes in to prop up falling rupee India’s central bank reportedly intervened in the currency markets on Monday to prevent a further slide in the local unit, which breached the 67 mark to a dollar for the first time in 15 months amid a widening trade gap and runaway import bills fuelled by high crude-oil prices. Some state-owned banks were seen selling dollars aggressively, interventions that market dealers attributed to the central bank’s strategy to stem the decline of the Indian rupee against the US currency. The rupee is the worst performing among a dozen Asian monetary units in the past three months. It lost 4.25 per cent to the dollar during the period, show data from Bloomberg. On Monday, the Reserve Bank of India (RBI) is said to have sold about Rs 800 million collectively on the spot and exchange traded futures markets, dealers said. An email sent to RBI remained unanswered until the publication of this report. The currency market has seen such a strong central ban

No objection from RBI and DIPP to FDI increase in Idea Cellular The Reserve Bank of India and the department of industrial policy and promotion (DIPP) have not raised any objections to increase in foreign direct investment of Idea CellularNSE -0.88 %, taking its proposed merger with Vodafone India closer to realisation. Once Idea gets clearance to increase FDI in itself from nodal agency department of telecommunications (DoT), the two companies will need to ask DoT to transfer Vodafone’s licence to Idea for final approval of the mega merger that would create India’s largest mobile phone operator by revenue and subscribers, officials said. While RBI has not found any lapse on account of Foreign Exchange Management Act in the merger of downstream subsidiaries of Idea Cellular and Vodafone India, DIPP has asked DoT to get clarification and documentation on whether all upstream and downstream companies that hold shares in the Indian entities are FDI compliant. “We have to check whe

Taxpayers may have to explain discrepancies in I-T, GST returns Government moves to link databases to get all relevant details of a firm, use fraud analytics to look for evaders The annual return forms for goods and services tax (GST) may ask taxpayers to explain any discrepancies between their income tax and GST returns as the government seeks to tighten rules to deter companies from evading taxes.This is part of the government’s efforts to collate all available sources of information in order to get the 360-degree profile of a taxpayer. The government is trying to link different databases to get all relevant information about a company—financial transactions, registration information and direct and indirect tax filings—and use fraud analytics to look for tax evaders. However, initially to deter taxpayers from evading GST by understating their turnover, the annual GST return form will seek details of taxpayers’ income tax return filings to see if they are understating sales tu

Sebi order on extending derivative trading: Key takeaways and challenges  In a move aimed at attracting investors dealing in Indian products on foreign exchanges in Singapore and Dubai, the Securities and Exchange Board of India (Sebi) on Friday allowed domestic stock exchanges to extend equity derivatives trading until 11.55 pm. The new timings will also allow a better alignment with commodity markets amid implementation of universal exchanges, which function until 11:55 pm. In this Business Standard special piece, Deven Choksey, managing director of KR Choksey Investment Managers, looks at the Sebi order and explains the key takeaways. The first good thing about that the entire development is that it brings the equity derivative market in line with the commodity derivative market. Both markets will now have similar trading hours, which will reduce systemic risk in the markets. The second aspect, the extension of trading hours will result in providing a hedging facility to portfo

Why the govt is preparing a new telecom policy Why do we need a new communications policy? A lot has changed since India’s last telecom policy in 2012. The country now has the world’s second largest internet subscriber base and is seeing technological shifts in digital communications. With the advent of 5G, artificial intelligence and the Internet of Things, India needs a vision document on how to use these digital tools for the growth and development of the country and what laws need to be drafted or amended. Moreover, given the capital-intensive nature of the sector, ease of doing business needs to be improved to attract investments. What are the goals of the policy? The department of telecommunications (DoT) on 1 May floated a draft policy, with a target of attracting investments of $100 billion in digital communications. The DoT plans to send it to the cabinet in four weeks. The policy’s objectives include broadband for all, with a thrust on fibre-to-home connections, creating

Govt's move on fund transfer to states led to spike in bond yields ast year the Union Finance Ministry changed the dates on which it periodically transfers to states their share in central taxes. The conventional practice was to transfer funds on a monthly basis. Instead, the Centre had decided, it would from April 2018 (when the new financial year began) be transferring the states’ share in direct taxes on a quarterly basis. Transfers from Centre are a significant proportion of state revenue. So, the change created a cash management problem for states - they would have to find their own resources for spending, till the central transfer at the end of each quarter. To meet this need for additional cash every quarter, states had planned to borrow more in the first half of the financial year from markets. This surge in the supply of state paper caused a turmoil in the bond markets in early April. Yields soared, catching market observers off-guard. Perhaps realising the cascading e

Jury is out on the impact of RBI's foreign portfolio investor measures As the short-term borrowing cost of companies spiked and foreign portfolio investors (FPIs) liquidated their bond holdings in India for greener pastures, the Reserve Bank of India (RBI) came out with various remedial measures. In the first week of April, the central bank had increased the limit of foreign investment in Indian bonds to 6 per cent of the outstanding (in two phases till 2019-20), from 5 per cent now. By the end of April, it allowed foreign investors to invest in any maturity they wished to, from the earlier restriction of investing only in papers with a residual maturity of at least three years. In corporate bonds though, the minimum residual maturity is one year, down from three years. While it did raise the cap on aggregate FPI investment in any government securities to 30 per cent, from 20 per cent earlier, the central bank also imposed a new limit that investment below one year should not