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With an aim to safeguard mutual fund investors from high-risk assets, regulator Sebi wants fund houses to shift all their investments to listed or to-be-listed equity and debt securities in a phased manner and reduce their exposure to unrated debt instruments from 25 per cent to only 5 per cent.  Exposure to risky debt securities has emerged as a major risk for the capital market investors, including those coming through the mutual fund space, and the regulator has been making efforts to enhance its regulatory safety net against such risks.  Taking forward certain decisions approved by Sebi's board earlier in June, the regulator has now finalised the draft amendments to the prudential norms for mutual fund schemes for investment in debt and money market instruments.  Besides, some further amendments have been proposed for approval of Sebi's board at its next meeting later this month, officials said.  A key fresh proposal is to reduce the existing overall limit for investment

The Reserve Bank of India (RBI) will cut interest rates again at its October meeting, making it the fifth in a row, according to economists in a Reuters poll who said the central bank's decision to ease by 35 basis points on Wednesday was right.  While a survey taken ahead of August's meeting showed a 25 basis points rate cut was a done deal, the RBI was expected to keep rates unchanged for the rest of this year.   However, a more recent Reuters poll, conducted Aug 7-8, predicted the RBI would ease its benchmark lending rate by 25 basis points to 5.15% in October. If it does cut again as forecast it would be a repeat of a cutting spree last seen in 2000-01  After the expected October cut, the RBI is then forecast to ease by 15 basis points to a near decade low of 5.00% in the first quarter of next year, although much depends on global conditions.  "India is amidst an economic and financial slowdown with minimal support from fiscal policy. The responsibility is being born

The income tax (I-T) department has relaxed its assessment and scrutiny norms for start-ups.  In a circular it directed its officers not to raise additional tax demands for start-ups recognised by the Department for Promotion of Industry and Internal Trade (DPIIT).  This will be done in cases where scrutiny is limited to Section 56 (2) (viib) of the Income Tax Act, or what is called in popular parlance angel tax.  Angel tax refers to income tax payable on capital raised by unlisted firms by issuing shares where the share price is considered more than the fair market value.  “No verification on such issues will be done by the AOs (assessing officers) during the proceedings and the contention of such recognised start-up companies on the issue will be summarily accepted,” the circular said.  In cases where start-ups are recognised by the DPIIT but scrutiny involves wider issues, the I-T Department has asked its field formations not to pursue the issue of the angel tax during the assessm

Reserve Bank of India Governor Shaktikanta Das gave a big push to retail lending by lowering risk weights for consumer lending and raising the bank exposure limits for non-banking finance companies which could directly boost borrowing capacities for top firms.  Housing Development Finance Corp., Mahindra Financial and Chola are among the firms that could benefit from the RBI’s change of rule in regard to banks’ lending to NBFCs.  Permission to classify bank lending to some NBFCs that lend to priority sectors as such would reduce the time taken for transmission which otherwise had to wait for securitisation.  “This will reduce our capital requirements for these loans and increase our risk adjusted returns,” said PK Gupta, managing director at State Bank of India. “Some of these benefits can be passed on to the customer. It could have some impact on rates though we are yet to calculate it. The main reason this was done was because despite an expansion in these loans, delinquencies have

The Reserve Bank of India released the quarterly survey on capacity utilisation (CU), order books and inventories in the industry for Q4 FY19. While CU keeps its six-year-high title this time too, new orders have grown this time, but sales have declined, the survey shows. Expansion in new orders is being seen as an uptick in activity. Improvement in inventory of raw material and finished goods is suggestive of decline in sales in this period, the RBI said. This survey provides a snapshot of demand conditions in India’s manufacturing sector. Business Standard, 8th August 2019

The Reserve Bank of India (RBI) on Wednesday moved for an unconventional repo rate cut by 35 basis points, the first of such magnitude by the central bank, to arrest falling economic growth while insisting that banks must now pass on the benefits to their customers.  The central bank has lowered the growth projection for the current financial year to 6.9 per cent from 7 per cent earlier. It kept its inflation projection unchanged at 3.1 per cent.  In response to the policy, State Bank of India (SBI), which recently lowered the deposit rates, cut its lending rate by 15 basis points across all tenors. Housing Development Finance Corp (HDFC), too, last week lowered its loan rates by 10 basis points.  RBI Governor Shaktikanta Das said “all stakeholders must act together” to lift economic growth. He said while the RBI lowered rates, the government was looking at sectoral issues. The banks must now cut their lending rates, he added, though he did not say if these would be enough to encoura

India’s version of Google tax, or the equalisation levy, may now be applicable in Jammu & Kashmir. With Parliament passing a Bill to revoke Article 370, digital commerce operators advertising on global social media, which earlier did not pay Google tax on their operations in Jammu & Kashmir, may now have to cough it up at 6 per cent.  According to people across companies, firms such as Facebook, Google, Amazon and Flipkart, among others, are all trying to figure out various tax implications of the government’s move.  “We are assessing if we need to start paying additional taxes, and also if we have to change our accounting strategies. This will take a few weeks as the government has just made the announcements. We will get a better idea after we have a meeting with the tax department in Jammu & Kashmir,” said a senior management member at one of the biggest e-commerce firms.  Industry experts believe the equalisation levy is something that may be applicable to the region,