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PSU Bankers’ Union Challenges RBI’s Feb 12 Bankruptcy Circular Petition says provision will cause a loss of Rs 1 L cr, threatening viability of banks The biggest union of state-run banks has filed a writ petition in the Delhi High Court challenging the Reserve Bank of India’s (RBI’s) controversial February 12 circular that bankruptcy proceedings will kick in 180 days after a borrower misses a payment without allowing even a day’s extension. The All India Bank Officers’ Confederation (AIBOC), which represents 3 lakh supervisory staff and officers in public-sector banks, said the provision will cause a loss of Rs 1 lakh crore, threatening the viability of banks and consequently the livelihood of its members. AIBOC wants the high court to quash the circular. Members of the AIBOC said the court has issued a notice to the RBI after admitting the petition that was filed recently against the central bank and the government. In its petition, the union has alleged the circular violates

 ICAI opposes move to exclude CAs from carrying out valuation Rule 11UA provides for determining the fair market value of various specified assets under Section 56 of the Income-tax Act, 1961 The Institute of Chartered Accountants of India (ICAI) and four other accounting associations have written to the Central Board of Direct Taxes (CBDT) opposing the latter’s move to amend Section 11 UA of the Income Tax (I-T) Act. The step will pave the way for excluding chartered accountants from carrying out valuation of unquoted shares. Rule 11UA provides for determining the fair market value of various specified assets under Section 56 of the Income-tax Act, 1961. One of its sub-rules provides an option to the assessee to determine the fair market value (FMV) of unquoted shares with the help of a merchant banker or an accountant. The recent amendment has excluded the term ‘accountant’. ICAI believes the paucity of available merchant bankers could jack up costs of determining the FMV o

  Fed hikes rates amid stronger inflation, shifts from crisis-era stance Policymakers projected a slightly faster pace of rate increases in the coming months The Federal Reserve raised interest rates on Wednesday, a move that was widely expected but still marked a milestone in the US central bank's shift from policies used to battle the 2007-2009 financial crisis and recession. In raising its benchmark overnight lending rate a quarter of a percentage point to a range of between 1.75 per cent and 2 percent, the Fed dropped its pledge to keep rates low enough to stimulate the economy "for some time" and signalled it would tolerate above-target inflation at least through 2020. The Fed has raised rates seven times since late 2015 on the back of the economy's continuing expansion and solid job growth, rendering the language of its previous policy statements outdated Inflation is also snapping into line, with fresh projections from policymakers on Wednesday indi

  Visa cuts fee on card transactions, industry says business as usual The company hopes that the rate cut will drive greater digital adoption, both for consumers and merchants The steep cuts in data processing charges by leading card network Visa recently will have little impact in improving card acceptance in India as the economy is mainly cash dependent, said industry executives. Visa cut its fee per transaction by up to 95 per cent for transactions below Rs 2,000 and the company also reduced its charges for higher-value payments to Rs 1.5 from Rs 2.99 per transaction Usually, these charges along with banks’ fee as issuers and merchant acquirers are borne by the merchants. The company hopes that the rate cut will drive greater digital adoption, both for consumers and merchants. Over the last 18 months, debit card has rapidly evolved from being a mere ATM cash withdrawal tool to a powerful digital payment means for Indian consumers across segments. This further reinforces our

  RBI again seeks more power to rein in PSBs The RBI has yet again made a strong case for more power to regulate public sector banks (PSB) effectively. RBI Governor Urjit R Patel, who appeared before the Standing Committee on Finance on Tuesday, also submitted a detailed written response to questions that the members had raised. The meeting was called to record the Governor’s evidence on ‘Banking Sector in India: Issues, Challenges and the Way Forward, Including Non-Performing Assets/Stressed Assets in Banks/Financial Institutions.’ Sources said the RBI, in a written submission, said Section 5(C) of the Banking Regulation (BR) Act defines a banking company as ‘any company’ which transacts the business of banking in India. PSBs are not companies, but corporations formed by statutes. They are, therefore, not ‘banking companies’ and the BR Act does not apply to them in full. “Only those provisions of the BR Act specifically enumerated in Section 51 of that Act or elsewhere in

  Cabinet hikes carpet area for affordable housing, higher demand seen The decision could help homebuyers access bigger, ready-tomove-in houses at lower costs. In some good news for builders and middle-class homebuyers, the Union cabinet increased the carpet area of houses under the government’s affordable housing scheme on Thursday. The decision could help homebuyers access bigger, ready-to-move-in houses at lower costs, while developers with large inventories could look forward to renewed demand, triggering a virtuous cycle of employment generation and economic growth. The tweaks to the NDA government’s flagship housing programme—pradhan Mantri Awas Yojana (Pmay)—follows requests from the industry which was saddled with thousands of flats that had margin- ally bigger carpet areas than allowed under the scheme. In the first middle income category (Rs6-12 lakh/annum), the carpet area was raised from 90 to 120 sq. m (968 sq. ft - 1184 sq. ft). In the income category of Rs12-

 NIIF may Lend a Hand to Resolve Stressed Assets Infra fund could be roped in as investor to set up ARC to take over stressed loans The National Investment and Infrastructure Fund (NIIF) may be roped in as an investor to set up an asset reconstruction company (ARC) that will take over the stressed loans of state-run banks, said a senior government official. “Bankers are thinking to get NIIF as a sponsoring agency. They (banks) themselves can pitch in some capital,” the official said, adding that Asset Reconstruction Company of India Ltd, sponsored by public sector banks (PSBs), has legacy issues. Acting finance minister Piyush Goyal had last week announced a committee under the chairmanship of Sunil Mehta, non-executive chairman of Punjab National Bank, to examine the idea of an ARC and/ or asset management company (AMC) for faster resolution of stressed assets involving multiple state-owned lenders. The committee is to give its recommendations in two weeks. The government