CA Online

  Foreign holding rules for NBFCs raise risk of data breaches  The Indian financial system faces a new threat from overseas – data and capital dumping. The regulatory arbitrage between NBFCs and banks could open up avenues through which Chinese investors in NBFCs could take out data of Indian borrowers. While the Reserve Bank of India has been strict with foreign ownership of Indian banks, a loophole in NBFCs’ ownership, which are competing and eating into market share of banks, poses a threat.  The industry is concerned about the easy access of data by foreign entities in the financial services sector. Some leading players want to have a relook at the regulation relating to holding structure of NBFCs.  “There are two different issues --one is data and the other is capital dumping,” said Gagan Banga, vice chairman, Indiabulls Housing Finance. “If capital dumping is coming from promoters, who are in the habit of losing capital for the first few years and building business on it, l

Bank Nifty likely to be rangebound, experts recommend short strangle  Traders can hope to rake in modest gains by initiating a risky short strangle on Bank Nifty options, which data show would trade in a 26,000-27,000 range this series. The strategy consists of selling a Bank Nifty call and put at 26,800 and 26,000, respectively, which covers the 1,000-point range when the premium for selling the strangle is included. Both the options expire on June 28. The Bank Nifty closed at 26,417.4 on Friday.  The risk lies in the index breaking sharply above or below the 1,000-point range, if global trade tensions escalate, in which case losses can be unlimited, unless the trader puts stop losses.  Assuming Friday closing prices of Rs 124 a share (40 shares equal one contract) for the 26,000 put and Rs 118 for the 26,800 call, the seller receives a combined Rs 242 from the sale of the two strikes. The expectation as of now is that the Bank Nifty would not break out of the 26,800-26,000 rang

Rising corporate deposit rates likely to move further up  Savers have enough reason to rejoice after the Reserve Bank of India (RBI) effected the first rate increase in more than four years, pointing to a commensurate rise in rates for corporate deposits.  Although commercial banks did not raise rates in bulks, at least four nonbanking finance companies (NBFCs) — Bajaj Finance, Dewan Housing Finance, Shriram Transport Finance and Mahindra Finance — have increased rates by 10-60 basis points. On renewals, most of them now offer 15-25 basis points extra.  Senior citizens can earn about quarter to half a percentage points more in returns.  Following RBI’s policy action, the latest series of rate hikes have come from non-banking finance companies than any commercial banks,” said Anil Chopra, group director — corporate affairs, at Bajaj Capital. “Retail investors have again started making a beeline for highyielding corporate deposits after the rises in past one or two weeks.”  “The

Reserve Bank of India relaxes norms for FPI investment in bonds FPIs had lobbied with the RBI and finance ministry, as well as the Securities and Exchange Board of India (Sebi), that a huge lot of NCD issuance was stuck because of RBI rules The Reserve Bank of India (RBI) on Friday relaxed its April notification, which forbade FPIs from investing more than 20 per cent of their portfolios in bonds issued by a single corporate group. While the regulations remained the same as mentioned in April, the central bank said FPIs could carry on with transactions committed till April 27, when the notification came. In the April 27 notification, the central bank had said an FPI, or its entities, could not have more than 50 per cent of investment in a single corporate bond and their portfolios could not take more than a 20 per cent exposure in any single corporate group. On Friday, the RBI said its April provisions could be relaxed if a commitment for investment had been made by April 27

 Centre, state to share GST anti-profit funds Centre and the ‘concerned state’ will equally share the amount deposited by erring businesses in the consumer welfare fund set up as part of the GST anti-profiteering rules, as per a Finance Ministry notification. following the rollout of GST in july last year, the government set up a national anti-profiteering authority to penalise business for failure to pass on tax benefits to consumers. In case the customer is not identifiable, the money has to be deposited in the consumer well are fund. The Business Standard, New Delhi, 16th June 2018

Higher interest rate may cap GDP at 7.5%: Nomura Growth in the current fiscal year will be faster in the first half and will likely face pressure in the second half to end the year at 7.5 per cent, a Japanese brokerage said on Friday. The rate hike by RBI and the oil prices raise concerns over sustainability of what ws termed as a " cyclical, broad-based recovery", Nomura 's chief india economist sona varma said. "We feel growth will be front-ended in fy19. The first quarter can see growth of 7.5-8 percen," she said. The Business Standard, New Delhi, 16th June 2018

India's exports hit 6-month high; trade deficit widens as imports up 14.85% The aftershocks of the Rs 140-billion Nirav Modi scam continued to affect the gems and jewellery sector A rise in receipts of petroleum, engineering and pharmaceutical products boosted May’s export growth figures to a six-month high of 20.18 per cent, up from 5.71 per cent in April. Even then the trade deficit widened to a four-month high of $14.62 billion, compared to the Dollar 13.7 billion deficit in April as imports rose by 14.85 per cent during the month, compared to the 4.60 per cent rise in April. This could pressurise the current account deficit in the first quarter of the current financial year after it stood at 1.9 per cent of GDP in the fourth quarter of 2017-18, compared to 2.1 per cent in the third quarter. However, within exports, major labour-intensive sectors, such as gems and jewellery and ready-made garments, continued to see declines, which might affect jobs. The export growth r