CA Online

RBI Relaxes Bond-Loss Provisions Again; Move to Protect PSB Margins PSU BANKS can spread April-June MTM losses over the next four quarters   The Reserve Bank of India remains kind to banks, relaxing provisions for bond losses once again.  The RBI has extended the lifeline to state-owned banks, which face a double-whammy of treasury and loan losses.  The central bank has allowed them to spread their mark-to-market losses incurred in the April-June quarter equally over the next four quarters, a move that will help  protect their dwindling profit margins.   “It has been decided to grant banks the option to spread the mark-tomarket losses on investments held in Available for Sale (AFS) and Held for Trading (HFT) portfolio  for the quarter ending June 30, 2018, equally over a period of four quarters, commencing from the quarter ending June 30, 2018,” the RBI said in its bi-monthly policy  statement.  If a bank incurs a loss of ?100 crore in the three months ended June, it can se

RBI increases repo rate by 25 bps to 6.25%; maintains neutral stance The central bank's April policy tone was dovish and it had actually lowered inflation forecasts for the first and second half of 2018-19   The six-member monetary policy committee (MPC) on Wednesday unanimously voted for a rate hike, citing the fear of inflation, partly flared by the recent spike in  crude oil prices. The hike in policy repo rate to 6.25 per cent from 6 per cent was contrary to market expectation that the central bank will hold rates and the  unanimous decision came as a surprise to the markets. The central bank’s April policy tone was dovish and it had actually lowered inflation forecasts for the first and second half of 2018-19. On Wednesday, the inflation  outlook was revised up once again.  With the hike in the June policy, the Reserve Bank of India (RBI) has reversed the rate cutting cycle it had engaged in since January 15, 2015. The last rate hike  happened on January 28, 2014, when

  Retrospective benefits on gratuity not on the cards, says NDA govt The law was amended to bring parity between public and private sector employees (including PSUs) after the gratuity limit was raised for central government on similar  lines The National Democratic Alliance (NDA) government has decided against passing the benefits under the new gratuity law, which doubles the present maximum payout, with  retrospective effect.  This is owing to employers fears of a higher payout. The government received several requests from workers’ representatives belonging to public sector units (PSUs)  and the private sector for doubling the limit for gratuity payout on par with central government employees.  Parliament had passed the Payment of Gratuity (Amendment) Bill, 2018, in March this year, in a bid to raise the gratuity limit to Rs 2 million from the Rs 1 million  earlier.   The law became applicable on March 29, through an official notification.  “On earlier occasions also, the

  Government okays revised guidelines on time-bound closure of sick PSUs The decision was taken at a meeting of the Union Cabinet chaired by Prime Minister Narendra Modi here The government on Wednesday approved revised guidelines on time bound closure of sick and loss making central public sector enterprises and disposal of their movable  and immovable assets. The move is expected to reduce delays in implementation of closure plans for loss making PSUs.  The decision was taken at a meeting of the Union Cabinet chaired by Prime Minister Narendra Modi here.  The guidelines accord first priority for utilisation of available land parcels of CPSEs under closure for affordable housing as per the relevant guidelines of  Ministry of Housing and Urban Affairs.    As per the new norms, the government has laid down a uniform policy to give workers VRS at 2007 notional pay scale irrespective of the pay scale in which they are  working.  The new norms will replace the guidelines issued

MCA quizzes auditors who quit assignments; explanations sought in 15 cases The Securities and Exchange Board of India is also quizzing auditors who had resigned from listed companies The corporate affairs ministry (MCA) has sought details from some auditor companies, which resigned their assignment after the companies concerned had reportedly  refused to give them adequate information.  Officials said explanations had been sought from auditors in 15-odd cases. Rules, they said, were being worked on regarding eligibility to audit big companies. These rules will be part of the proposed National Financial Reporting Authority (NFRA), as many smaller auditing firms are reportedly replacing the bigger ones that  had refused to audit some companies.  That apart, ministry officials said some of the auditors were citing ‘personal reasons’ for quitting, while others had not given adequate reasons.  The Securities and Exchange Board of India is also quizzing auditors who had resigned from

  World Bank forecasts 7.3 per cent growth for India in FY2018-2019 It said that growth in South Asia is projected to strengthen to 6.9 per cent in 2018 and to 7.1 per cent in 2019, mainly as factors holding back growth in India fade The World Bank has forecast a growth rate of 7.3 per cent for India this year and 7.5 per cent for the next two years, making it the fastest growing country among  major emerging economies.  A top World Bank official said India's economy is robust, resilient and has potential to deliver sustained growth.  Growth in India is projected to advance 7.3 per cent in Fiscal Year (FY) 2018/19 (April 1, 2018-March 31, 2019) and 7.5 per cent in FY 2019/20, reflecting robust  private consumption and strengthening investment, the bank said in its June 2018 edition of the Global Economic Prospect report. The report, released yesterday, is the global lender's flagship publication on the state of the world economy.  It said that growth in South Asia i

  RBI relaxes NPA classification norms for MSMEs under GST For non-GST registered MSMEs, NPA norms would revert to 90 days from January 1, 2019 In a major relief to MSMEs, the Reserve Bank on Wednesday eased NPA classification norms for such units facing input credit linkages and associated issues under the  Goods and Services Tax.  "In continuation of support and relief to MSMEs, NPA recognition for GST and non-GST MSMEs is now at 180 days for dues up to December 31, 2018," Financial Services  Secretary Rajiv Kumar said.  Now 180-day NPA norms are applicable for all micro, small and medium enterprises dues between September 1, 2017 and December 31, 2018 if the account was standard on  August 31, 2017, he said, adding this dispensation covers both registered as well as unregistered MSMEs.   With regard to GST registered MSMEs, 180-day NPA norms will be brought back to 90 days only in a phased manner, starting January 1, 2019.  For non-GST registered MSMEs, NPA nor