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Reserve Bank of India to tighten norms for working capital limits

Reserve Bank of India to tighten norms for working capital limits Public sector bank executives said the move was expected to provide predictability over cash flow for lenders In a move to instil discipline among large borrowers with working capital facility, the Reserve Bank of India has mooted a proposal that at least 40 per cent of the sanctioned limit should be a term loan component. For borrowers with an aggregate fund-based working capital limit of Rs 1.5 billion and above from the banking system, a minimum level of ‘loan component’ of 40 per cent shall be effective from October 1, 2018, the RBI said in draft norms placed on its website. It has sought feedback from banks and stakeholders till June 26, 2018.
The 40 per cent loan component will be revised to 60 per cent with effect from April 1, 2019. For large borrowers, the outstanding ‘loan component’ must be equal to at least 40 per cent of the sanctioned fund-based working capital limit, including ad hoc credit facilities.Drawings…

Authority's orders favour firms for anti-profiteering in times of GST

Authority's orders favour firms for anti-profiteering in times of GST The NAA is currently looking into 50 complaints and will issue the orders in the coming weeks Allaying industry’s apprehensions, all three orders passed by the National Anti-Profiteering Authority under the goods and services tax (GST) regime have so far gone in favour of companies. In its latest order, the five member NAA has dismissed complaint against elevator manufacturer Schindler India for charges of profiteering filed by a Delhi business. The complaint pertained to charging of service tax on the payment made to Schindler India before GST implementation on July 1, 2017 and GST for the payment installments made in July when the installation took place. However, since elevators were delivered to the firm before July 1, the tax had been charged without excluding the pre-GST regime excise duty. Hence, the applicant was charged twice — once on the pre-GST excise duty and subsequently on the full value of the materi…

FinMin extends due date for debt ETF bids from advisers till July 2

FinMin extends due date for debt ETF bids from advisers till July 2 The DIPAM had earlier on April 18 issued the RFP for engagement of an adviser for creation and launch of debt ETF asking bidders to submit their bids by May 16The Finance Ministry has extended the deadline for merchant bankers to bid for creation and launch of a debt Exchange Traded Fund (ETF) for PSUs and PSBs till July 2. In the revised request for proposal (RFP) issued on Monday , the Department of Investment and Public Asset Management (DIPAM) has tweaked the eligibility criteria for bidders, clarifying that they can also bid in consortium.Accordingly, market regulator Sebi or banking regulator RBI registered "reputed merchant bankers/investment bankers/ consulting firms/financial institutions/asset management companies, either singly or as a consortium," can bid for creation of the ETF till July 2. In the revised request for proposal (RFP) issued on Monday , the Department of Investment and Public Asset Ma…

Govt: No Provision of Summer Break for NCLT, NCLAT

Govt: No Provision of Summer Break for NCLT, NCLAT MCA points to 2016 rules; NCLAT to consider request in July post vacation The government wants National Company Law Tribunals (NCLT) and National Company Law Appellate Tribunal (NCLAT) to work through the summer, without a break, to resolve the corporate insolvency cases that have been piling up.The ministry of corporate affairs (MCA) on June 4 sent separate letters to the NCLAT and the NCLTs saying that there’s no provision for vacation under the rules framed in 2016. The move was sparked by the NCLAT posting a vacation notice on its website announcing a break from June 1to July 1. The NCLTs plan a 15-day break. Responding to MCA’s letter, the NCLAT deputy registrar wrote back on June 5 that the issue had been placed before the full court. The matter will be further examined in the first week of July. Since that will be after the vacation, it could mean these courts taking a break against the wishes of the government. NCLT is also belie…

Cracking 'bad bank' tough nut, but it's not impossible, say experts

Cracking 'bad bank' tough nut, but it's not impossible, say experts
The NPA problem and the effect on bank balance sheets has not improved despite the Insolvency and Bankruptcy Code (IBC) processThe idea of a ‘bad (loans) bank’ is back on the table as loans gone sour at Indian banks near Rs 10 trillion.Details are sketchy yet on whether the asset reconstruction company (ARC) in this regard would be owned by the government or have non-state participants. Either way, say experts, this is not going to be an easy task. In any case, there are precedents in India, albeit much smaller in scale. A direct example can be found in the Stressed Assets Stabilisation Fund (SASF), formed in 2004 by the Government of India, to recover Rs 90 billion bad debt of the erstwhile Industrial Development Bank of India (later converted into IDBI Bank). The government issued bonds against the debt and the balance sheet was cleaned. For some accounts, the fund did recover a substantial amount. However,…

New Accounting Rules may Deal Rs 20kcr Blow to Builder

New Accounting Rules may Deal Rs 20kcr Blow to Builder
Realtors will have to write back profits retrospectively on all incomplete projects The implementation of a new accounting standard from this fiscal will force listed real estate companies to write back profits made over the past few years from all projects that are not complete. That could hit the balance sheets of companies, many of which are still recovering from their debt-fuelled spending binges of the past decade or so. Developers have written to the government seeking relief. Under IND-AS 115, in line with international norms, listed real estate companies will have to write back about ?20,000 crore from their net worth in the current fiscal itself, said a top industry executive, asking not to be named.The new accounting standard took effect in April.Real estate companies will have to switch to the Project Completion Method from the existing Percentage Completion Method (POC). Under the previous norm, home buyer payments toward …

CEOs Expect FY19 GDP to Grow More Than 7%: CII Poll

CEOs Expect FY19 GDP to Grow More Than 7%: CII Poll
Most of the industry leaders also see a pickup in capacity utilisation due to increased demand Investment in the country is likely to get a strong boost with the economy set to grow past the 7% mark in the current fiscal year, a CII poll of CEOs has indicated. A majority of the CEOs polled expect a pickup in capacity utilisation in industry due to increased demand, as well as creation of more jobs. The economy is in a sweet spot right now as the adjustment process regarding major reforms of the past few years is largely stabilised and industry is ready for a fresh phase of investment while capacity utilisation builds up,” said CII president Rakesh Bharti Mittal said. As much as Rs 50,000 crore of investments have recently been announced, noted the CII. “Industry is looking forward to GDP growth rate picking up to close to 8% over the next couple of years. Fiscal prudence, able macroeconomic management and strong reforms process have set …