WEEKLY FINANCIAL SNIPPETS – 12/01/2019

1. RBI’S KYC DEADLINE MAY HAMPER WALLET COMPANIES PLANS: Prepaid Payment Instruments (PPIs) or Mobile Wallets were mandated by Reserve Bank of India in October 2017 to capture all information of its users as required under Know-Your-customer (KYC) guidelines. So far Wallet Companies have been able to verify only a fraction of their total user base, and are yet to complete the biometric or physical verification of majority of users. This means more than 95% of mobile wallets in the country could stop operating by March 2019 if they do not comply with the RBI mandate.

 

2. AROUND 16% OF ASSESSEES DO NOT FILE MONTHLY GST RETURNS: The latest government data reveals that on an average 16% of GST return assessees are not filing their monthly GST returns. And under Composition scheme the percentage of non-filers as on November 2018 was 28.7%. As per the GST law every GST registered person will have to file GST returns in one form or the other. A registered person will have to file monthly returns (if he is a normal supplier) or on quarterly basis (supplier opting for composition scheme).

 

3. CREDIT GROWTH OF PRIVATE AND COMMERCIAL BANKS SURGES: Credit growth of Scheduled Commercial banks (SCBs) improved across all bank groups between March and September 2018. According to the Reserve Bank of India’s latest Financial Stability Report the credit extended by all SCBs increased by 13.1% as on September 2018 and that of private sector banks grew by 22.5% during the same period.

 

4. NO e-WAY BILL IF GST RETURNS NOT FILED FOR TWO MONTHS: The GST council has formulated a new rule according to which the Finance Ministry has barred e-way bill generation for transporting consignment if the supplier or the recipient of the cargo has not furnished returns for two consecutive tax periods under GST. The e-way bill is required to be generated from a common portal by a business unit for movement of consignment worth Rs. 50,000/-

 

5. RBI LIKELY TO PAY INTERIM DIVIDEND OF Rs. 40,000 TO THE GOVDERNMENT: The Reserve Bank of India is likely to transfer an interim dividend of up to Rs. 30,000 crore to Rs. 40,000 crore to the government by March 2019. The said amount could help the government to bridge the widening gap in the budget deficit following a drop in tax collections.

 

6. NBFCs AND HFCs RAISE FUNDS THROUGH SECURITISATION OF SME AND RETAIL LOANS: The cash starved Non-Banking Finance Companies (NBFCs) and Housing Finance Companies (HFCs) have sold their retail and SME portfolios worth Rs. 73,000 crore during October-December 2018 to banks through securitisation mode. These NBFCs and HFCs are facing lot of liquidity crunch in the aftermath of defaults by IL&FS and its group companies in the second quarter of this fiscal and have forced them to liquidate part of their loan portfolio to generate funds to meet redemption requirements and also to maintain their credit flow.

 

7. NO LIABILTY IF e-WALLET USERS REPORT FRAUD WITHIN 3 DAYS: Prepaid instruments comprise of Mobile wallets, Prepaid Payment Cards and paper vouchers like Sodexo. Now the Reserve bank of India has absolved customers using these prepaid instruments, of liabilities arising out of a fraud if the same is reported within 3 days. This is now on par with the rules that are prevailing for banks.

 

8. GST RELIEF TO MSMEs: The Micro Small and Medium Enterprises (MSMEs) who are registered under GST have now got the option of moving out of the GST ambit as the GST council has raised the aggregate turnover threshold for GST exemption to Rs. 40 lakh from the present Rs. 20 Lakh. Under the Composition Scheme the limit is increased to Rs.1.5 crore from present Rs.1 crore. The composition tax payer will pay tax quarterly but file the returns annually. Composition scheme is also newly started for services with a turnover up to Rs.50 lakhs and that will attract 6 % tax. These measures will come in to effect  from 1^st April 2019.

 

Advertisements

WEEKLY FINANCIAL SNIPPETS- 05/01/2019

1. NEARLY 9% OF EDUCATION LOANS GIVEN BY PUBLIC SECTOR BANKS TURN BAD IN 2018: Nearly 9% of Education Loans given by Public Sector Banks (PSBs)  have been categorised as Non-Performing Assets (NPAs) in the last fiscal year. This is as per the government report. As per the information provided by Indian Banks’ Association, NPAs of PSBs in education loan touched a figure of 8.9% as on March 31, 2018. Among the NPAs in education loan category the highest 21.28% originated from nursing courses.

 

2. NO JOB LOSSES DUE TO MERGER OF PUBLIC SECTOR BANKS: Finance Minister Mr. Arun Jaitley has said that there would be no loss of jobs due to merger of Public Sector Banks. He further said that the mergers could lead to creation of larger and bigger entities like SBI and there by the cost of lending could become cheaper.

 

3. PAYMENT BANKS SEE SECOND STRAIGHT YEAR OF LOSSES: Payment Banks, launched with an intension to make India more financially inclusive, are in fact proving to be a cause of concern to the regulators and investors as these banks have incurred losses even in their second year with little signs of turning over soon. The consolidated balance sheets for the operational payment banks showed net losses of Rs 516.50 crore for the fiscal year 2018 which is almost double that of fiscal year 2017 when they had incurred a loss of Rs 242.20 crore. These losses are attributed to high operating expenses as large capital expenditure had to be incurred while setting up initial infrastructure. In our opinion it may take some time for these banks to break even.

 

4. RBI SCALES DOWN PRINTING OF Rs. 2,000 CURRENCY NOTES: The printing of Rs.2,000 currency notes, introduced post-demonetization in November 2016 has been reduced to the minimum by Reserve Bank of India. When Rs. 2,000 were introduced, it was decided that printing of these notes would be scaled down over a period of time since this high value currency note was meant for meeting the re-monetization need.  Of the total currency in circulation amounting to Rs. 18,033 billion as on March 2018, Rs 2,000 notes accounted for 37.3%, down from 50.2% as at the end of March 2017.

 

5. RBI ALLOWS ONE TIME RESTRUCTURING OF MSME LOANS: In a breather to Micro, Small & Medium Enterprises (MSMEs) sector, the Reserve Bank of India has decided to permit one-time restructuring of existing loans to those enterprises that are in default but “standard”( Not NPA) as on January 01, 2019, without an asset classification downgrade. Restructuring without an asset classification downgrade will save the banks from higher provisioning burden. This will encourage banks and NBFCs to take up restructuring of MSMEs.

 

6. DIRECT TAX COLLECTION FOR FINANCIAL YEAR 2018-19 RISES BY 14%: The Direct Tax collection till December 20, 2018 amounted to Rs 7.36 Lakh Crore, a growth of 14% over the same period last year. This is 64% of the Budgeted target for the direct tax collection in the current fiscal. The number of income tax e-returns filed till December 6, 2018 stood at 6.09 crore which is 47% higher than last year.

 

7. PUBLIC SECTOR BANKS LOSSES ABSORBED 70% OF CAPITAL INFUSED BY GOVERNMENT IN LAST 3 YEARS: The government has infused capital in Public Sector banks intermittently in the last three years from 2015 to 2018. But more than 70% of the infused capital was absorbed into the losses incurred by these Public Sector Banks. This is as per the RBI report.

 

8. INDIAN BANKS RECORD LOWEST RETURN ON ASSETS SINCE 2008: Indian banks suffered badly from the weak asset quality and have recorded their lowest Return on Assets (RoAs) since 2008 in Financial Year 2018.While banks in Russia, India & China suffered decline in RoAs, countries like Brazil, Mexico & Indonesia posted robust RoAs.

WEEKLY FINANCIAL SNIPPETS- 29/12/2018

1. RBI TO SET UP COMPLIANCE PORTAL TO TRACK CYBDER FRAUDS: The Reserve Bank of India would set up a Compliance Tracking System Portal to tackle cyber frauds and establish a better redressal mechanism for consumers. With the digital transactions gaining momentum, this step is seen as a bid to promote and improve customer confidence in the digital channel. As per a RBI report on the data for reported frauds, 22.7% were cyber frauds in 2013-14 while the percentage was 34.1% in 2017-18, indicating a hike in cyber-related crimes.

 

2. RBI BACKS HIGHER CAPITAL NORMS, NEED FOR PROMPT CORRECTIVE ACTION: The Reserve Bank of India has backed its policy of asking banks to maintain capital ratios that exceed global norms. It also upheld the Prompt Corrective Action (PCA) framework for weak banks, which were point of contention between the RBI and the government.

 

3. ANGEL TAX RECOVERY PUT ON HOLD, RELIEF FOR START-UPS: Earlier the tax department had issued notices to Start-up companies for payment of Angel Tax. Now the Central Board of Direct Taxes (CBDT) has directed its officials from taking any coercive action or recovery measures for these start-up firms till a policy decision is taken. The Department of Industrial Policy & Promotion (DIPP) would soon constitute a committee to consider tax exemptions to Start-ups.

 

4. SINGLE GST RATE MAY BE IMPLEMENTED IN FUTURE: Finance Minister Mr. Arun Jaitley has hinted that India could go ahead with a single standard GST rate in future. Such a scenario could materialize only when the revenue from GST rises significantly. He said the country should eventually have one standard GST rate. The government is also looking to simplify GST, reduce number of items in highest GST bracket.

 

5. INDIA POST LAUNCHES E-COMMERCE PORTAL: India post has launched an E-commerce portal with an aim to provide an online market place to small artisans, self-help groups, women entrepreneurs in the rural areas as it operates a network of more than 1.5 lakh post offices in the country. The products sold will be shipped through its e-commerce portal, indiapost.gov.in via its speed post service.

 

6. NCLT HELPS RECOVER Rs. 80,000 CRORE IN 2018 FROM IBC CASES: The National Company Law Tribunal (NCLT) has helped to resolve insolvency and bankruptcy proceedings of more than Rs. 80,000 crore this fiscal. The amount is expected to touch 1 trillion in 2019 with several big–ticket corporate cases pending. Plans are being crafted out to strengthen NCLT by increasing the number of judges and benches and provide adequate infrastructure to fast-track the process for speedy resolution.

 

7. SEVEN PUBLIC SECTOR BANKS MAY GET Rs. 286 MILLION THROUGH RECAPITALISATION BONDS SOON: 7 Public Sector Banks (PSBs) will receive a capital infusion of Rs. 286 billion through the next tranche of recapitalisation bonds. All the banks, except Syndicate Bank, which are expected to receive capital infusion are under RBI’s Prompt Corrective Action (PCA) framework.

 

8. NBFCs FEEL THAT OVER REGULATION IS AFFECTING THEIR LIQUIDITY: Some key Non-Banking Finance Companies (NBFCs) have told Prime Minister Mr. Narendra Modi that over regulation is affecting their liquidity and hurting the sector. Some of the NBFCs backed by Assocham met the Prime Minister and requested for easier regulatory norms. They also told that fund raising activity remains highly restricted which creates a fund crunch.

 

 

WEEKLY FINANCIAL SNIPPETS-22/12/2018

1. FARM LOAN WAIVER PROMISE CAUSES 24% RISE IN MP FARM LOAN NPAs: As per the latest data available, the Non-Performing Assets (NPAs) in farm loans has doubled to 10.6% of the total advances in Madhya Pradesh. In a little over one year period ending June 2018, the NPAs in the state rose to 24%. A similar trend is seen in Rajasthan also. Farm waivers are bad news for Banks and Farmers. Anticipating relief, farmers start skipping repayments which impacts bank finances. Banks in turn slow down their fresh lending until governments reimburse the amount thus written off, which often happens over several years.

2. NOW EXECUTIVE DIRECTORS OF NATIONALISED BANKS ELEGIBLE TO BECOME MD OF SBI: Earlier as a tradition only Deputy Managing Directors (DMDs) of State Bank of India (SBI) were made Managing Directors of SBI and other nationalised Banks, where as other nationalised banks Executive Directors were made MDs of other Nationalised Banks but not of SBI. Now moving away from the tradition, the government has made a policy decision to select EDs of other Nationalised Banks to become MD of SBI. There are four MDs in SBI and the Chairman heads the Bank.

3. SBI MAY BUY OUT CANARA BANK’S LOAN OF Rs 400 CRORE: State Bank of India is looking to buy out Canara Bank’s Loans of about 400 crore in Ratnagiri Gas& Power Pvt Ltd (Erstwhile Dhabol Power Co). This is expected to be the first resolution under the Inter-Creditor Agreement (ICA), which is part of government’s Project Sashakt aimed at resolving bad loans. This step by SBI follows Canara Bank moving the National Company law Tribunal (NCLT) in September 2018 against Ratnagiri Gas.

4. GOVERNMENT STRIKES OFF NAMES OF 1 LAKH COMPANIES THIS YEAR: The government has struck off the names of one lakh companies from the official records in the current financial year as these companies have not been carrying out any business activities for long. Under the Act, the government can remove the names of such companies who have not been carrying out any business for two immediate preceding financial years and have also not sought dormant status. The names of 2,26,166 and 1,00,150 companies have been struck off during financial years 2016-17 and 2017-18 respectively by the Registrar of Companies after following prescribed procedures under Companies Act, 2013.

5. NON-CTS COMPLIANT CHEQUES WILL NOT BE CLEARED FROM JANUARY 1, 2019: Non-CTS ( Cheque truncation System) complied cheques will not be accepted in clearing from January 1st 2019 and the same will be returned in clearing. Cheque Truncation System of cheques was started in the year 2010 by RBI for faster clearance of cheques. Cheque Truncation means stopping of the flow of physical cheques issued by a drawer to the drawee branch.

6. TO PREVENT BAD LOANS, BANKS TO CROSS CHECK ADDITIONAL INFORMATION ON BORROWERS: Bankers will soon seek authorisation from their borrowers and guarantors so that they can approach authorities such as Income Tax Department and GST departments to cross check the authenticity of the information submitted by the borrowers for getting loans. The proposed move is aimed at strengthening the loan sanction mechanism. This move has been planned in the backdrop of the recent pile-up of bad loans in the entire banking system. The authorisation from borrowers and guarantors is like a consent given to the bankers so that they can approach these authorities to seek the information.

7. BANK OF BARODA TO LAUNCH NEW DIGITAL INTERFACE: Bank of Baroda is building a new digital interface for faster and more efficient disbursement of retail loans and the digital format will be launched by the bank next year. The bank has been improving its impetus on deploying technical solutions for business enhancement and increasing their digital footprint.

WEEKLY FINANCIAL SNIPPETS- 15/12/2018

1. PSBs PETITION NEW RBI CHIEF TO RELAX NPA RESOLUTION NORMS: The newly appointed Reserve Bank of India Governor Mr. Shaktikanta Das met Mumbai-based Public Sector Bank (PSBs) Chiefs in his first meeting with bankers this week and discussed a host of issues. During the meeting the PSB Chiefs have urged the RBI Governor to relax NPA resolution norms. They told that the 180 days deadline within which the account has to be resolved in case of a default is rather too severe and they wanted the deadline to be extended.

 

2. LIQUIDITY CONSTRAINTS FACED BY NBFCs TO TIGHTEN CREDIT SUPPLY AND DAMPEN GROWTH: Liquidity constraints faced by some Non-Banking Finance Institutions will tighten the credit supply and this will affect economic growth. This is as per Moody’s Investors Service Report. The report says this will slow down economic growth to some extent for the current fiscal. Besides, any further distress in the NBFC sector will pose significant downside.

 

3. GOVERNMENT PLANS ADDITIONAL 30,000 CRORE CAPITAL INFUSION IN PSU BANKS: The government is considering an additional capital infusion of up to Rs. 30,000 crore in Public Sector Banks as they have been unable to raise the required funds from open markets. The government initially had envisaged that the PSU Banks would raise Rs. 58,000 from stock markets by 2019 to meet Basel III norms. But due to the subdued market conditions, banks have been unable to raise enough funds from markets so far. Also the Non-Performing Assets of almost all the banks have seen a spurt which has hurt their bottomlines.

 

4. SBI PLANS TO DISBURSE AGRICULTURE LOANS DIGITALLY: State Bank of India is planning and is running a pilot project to disburse agriculture loans digitally. It expects to roll out the services to the rural public very soon. SBI has said that there are lot many fin-tech players in the market who are ready with the software and many of the Indian states have the land records of the farmers in digital format so this will help in providing digital loans to farmers using the technology.

 

5. 4 OF THE 11 INDIAN BANKS FACING PROMPT CORRECTIVE ACTION (PCA) MAY COME OUT OF PCA: Reserve Bank of India has estimated that 4 out of 11 banks facing Prompt Corrective Action (PCA) framework may come out of it based on their performance in Quarter 4 of the current fiscal and with some capital infusion by the government. Presently the 11 banks which are facing PCA are, IDBI (Net Loss Rs.3602 crore and Net NPA- 17.30%, United Bank (Net Loss Rs.  883 crore and Net NPA 14.36%, IOB (Net Loss Rs. 487 crore and Net NPA 14.34%, UCO Bank (Net Loss Rs.  1136 crore, and Net NPA 11.9%), Dena Bank (Net Loss Rs.417 crores and Net NPA 11.70%), Corporation Bank ( Net Profit Rs.103 crore and Net NPA 11.65%), Bank of Maharashtra (Net Profit Rs 27 crore and Net NPA 10.61%), Central Bank (Net Loss Rs. 924 crore and Net NPA 10.36%), Oriental Bank ( Net Profit Rs.102 crore and Net NPA 10.07%), Allahabad Bank (Net loss Rs.1083 crore and Net NPA   96% and Bank of India (Net loss Rs. 1156 crore and Net NPA 7.64%).

 

6. DIRECT TAX COLLECTIONS RISE BY 15.5% FOR APRIL-NOVEMBER 2018 PERIOD: The Direct Tax collections are up by 15.7% for the April-November 2018 period as compared to the corresponding period last year. The government has collected Rs 6.75 lakh crore during this period while the refunds amount to Rs 1.23 lakh crore. After adjusting the refunds the net collections are Rs. 5.51 lakh crore which shows a jump of 15.5% over the last year.

 

7. RESERVE BANK OF INDIA REDUCES SLR IN A GRADUAL MANNER: The Reserve Bank of India has initiated a step towards a gradual reduction in Statutory Liquidity Ratio (SLR) from the existing 19.5% to 18% in the next six quarters from January next year.

 

 

WEEKLY FINANCIAL SNIPPETS- 08/12/2018

1. RBI TO LINK INTEREST RATES TO EXTERNAL BENCHMARKS RATES : Reserve Bank of India (RBI) has proposed that banks will now have to link the interest rates charged by them on loans to the external benchmarks instead of the present internal benchmarks for better transmission of policy rates. According to the proposal the loans can be benchmarked to any one of the following: 1. RBI Policy Repo Rate, 2. Government of India 91 days treasury bill yield as fixed by Financial Benchmarks India Pvt Ltd (FBIL), 3. Government of India 182 days Treasury bill yield as fixed by FBIL, or 4. Any other benchmark market rate fixed by FBIL. However, the spread over and above the benchmark rate is to be wholly decided by the bank at its discretion and it should remain unchanged during the tenor of the loan, unless the borrower’s credit assessment undergoes a substantial changes.

 

2. PERMISSION FOR NEW BRANCHES FOR URBAN CO-OP BANKS RESTRICTED BY RBI: In a move to ensure better professionalism and governance in co-operative sector, RBI has put a condition that Urban Cooperative Banks(UCBs)  will be allowed to open new branches only if they amend laws to set up a Board of Management (BoM). A Board of Management be constituted in every UCB  in addition to Board of directors with a view to strengthening the governance.

 

3. RBI LAYS DOWN NORMS ON LOAN SYSTEM FOR LARGE BORROWERS: The Reserve Bank of India has said that borrowers with an aggregate Fund Based working capital limit of Rs 150 crore and above will need to have at least 40% in loan component from April 1, 2019. And this would go up to 60% by July 2019. The India Rating report said that the impact can be significant for working capital intensive sectors.

 

4. RBI EASES NORMS FOR NBFCs TO SECURITISE LOAN BOOKS: A move likely to ease the stress in the NBFC sector facing a crisis of confidence and funds crunch, RBI has relaxed norms for NBFCs to securitise their loan books. As per a notification of the RBI, NBFCs have been permitted to securitise loans of above Five-year maturity after holding them for a minimum period of six months.

 

5. INCOME TAX APPELLATE TRIBUNAL SAYS CONVERTING A COMPANY TO LLP IS A TRANSFER HENCE TAXABLE: Earlier Companies and professional were allowed to convert to Limited Liability Partnerships (LLPs) as this was facilitated by the government to attract foreign investors. Under a LLP it was allowed to freely distribute profits to partners as dividend without deducting dividend distribution tax. But  the recent ruling by Income-Tax Appellate Tribunal says that since transfer of companies and professionals into LLP is a transfer, hence the dividend thus transferred to partners is taxable.

 

6. THREE NEW PAN CARD RULES COME INTO EFFECT: The Department of Revenue has put into effect new rules with respect to Permanent Account Number (PAN) to check tax evasion and allow more options to tax payers. These 3 new rules are : 1. A resident person other than an individual ( like  an HUF, Firm, Charitable trust et cetra) who enters into a financial transaction of Rs 2.50 lakhs or more in a financial year and who has not been allotted PAN, shall apply for one by May 31  of the next financial year. 2.  A person who is Managing Director, Director, partner, trustee, Karta of such entities mentioned in

Point no 1 and who has not been allotted a PAN no shall apply for one. 3. Mentioning Father’s name in a PAN card will not be mandatory.

WEEKLY FINANCIAL SNIPPETS- 01/12/2018

1. NEW NOTES ISSUED AFTER DEMONETIZATION BECOME UNUSABLE AFTER 2 YEARS: New notes of Rs. 500 and Rs. 2000 were issued after the demonetization phase. These notes which were introduced with higher security features are becoming unusable within just two years of circulation. As per a report published by a Hindi Newspaper “Amar Ujala”, this is happening because the paper quality of the new notes is not good compared to the earlier notes. If the currency becomes unusable, it cannot be loaded in ATMs as the sensors inside the ATMs cannot detect poor quality notes. But government has denied any compromise with the quality of notes and said the new notes have higher security features to stop counterfeiting.

 

2. SBI TO BLOCK INTERNET BANKING FACILITY OF ITS CUSTOMERS WHOSE MOBILE NUMBER IS NOT LINKED TO THE ACCOUNT: State Bank of India has issued a notice stating that net-banking facility will be blocked for those of its customers who have not linked their mobile numbers to their respective accounts. As per RBI advisory, it is mandatory to register your mobile number to avail internet banking services. Banks must register mobile numbers of their customers for SMS alerts for electronic banking transactions like internet and mobile banking services.

 

3. GST ON BANKS’ FREE SERVICES: Over the last few months the tax department has issued preliminary notices to banks seeking to levy Goods & Service Tax (GST) on free services such as issue of cheque books, ATM usage and refund of fuel charges etc. The GST notice are separate from those served in April 2018 to recover about Rs. 40,000 crore in service tax and penalties from all banks. Most of the banks are now considering passing on the GST cost to the customer.

 

4. MEGA FOOD PARKS (MFPs) TO BECOME OPERTAIONAL THIS YEAR: The government’s dream project—Mega Food parks (MFPs) is all set to be operational as 14 MFPs will become operational this year. The estimated investment is around 3,500 crore and it will create around 70,000 new jobs. Creation of MFPs aims to bring together farmers, processors and retailers and link them with the market so as to ensure maximum benefit to the farmers.

 

5. THREE LAKH CRORE STRESSED ASSETS WERE ADDRESSED IN INSOLVENCY LAW IN LAST 2 YEARS: Since its inception in December 2016, the Insolvency Law has helped in addressing stressed assets worth 3 lakh crore in the last two years. More than 9,000 cases have come for redressal under the Insolvency & Bankruptcy Code (IBC).

 

6. CENTRE TO INFUSE Rs. 42,000 CRORE IN PSU BANKS BY MARCH 2019: The government will infuse Rs. 42,000 crore in the state-owned banks by March 2019. The next instalment will be released by next month. The government earlier this year had pumped Rs. 11,336 crore in 5 PSBs – Punjab National Bank, Allahabad bank, Indian overseas Bank, Andhra bank and Corporation Bank.

 

7. LARGE INDIAN COMPANIES MUST BORROW 25% IN BONDS FROM APRIL 1^st 2019: The Securities Exchange Board of India (SEBI) has said that Indian Companies with long term outstanding loans of Rs.100 crore and above will have to raise at least 25% of their fresh borrowings in bonds from April 1^ST This is an effort to strengthen the Indian Corporate Bond market which is relatively low compared to international markets.

 

8. NOW NO NEED FOR NRIs TO REVEAL DETAILS OF FOREIGN BANK ACCOUNTS: As per the latest ruling by Income-Tax Appellate Tribunal (ITAT) now Non Resident Indians (NRIs) need not reveal details of their Foreign Bank accounts and assets to Indian authorities. The Tribunal has also ruled that the onus of proving that the assessee has parked undeclared income arising from India in Foreign Bank accounts lies with Income Tax Department.

WEEKLY FINANCIAL SNIPPETS- 24.11.2018

1. BANK CREDIT GROWS BY 14.88% AND DEPOSITS BY 9.13%: The total Bank credit went up by 14.88% to touch  91.11 Lakh Crore and Deposits by 9.13% to Rs 118.25 Lakh Crore as on November 9, 2018. A year ago during the same time the Bank credit was Rs 79.31 lakh Crore and Deposits stood at Rs 108.35 Lakh Crore. Bank credit to Service sector expanded by 24% as compared to with 7% in September 2017. Advances to agriculture and allied activities grew by 5.8%.

 

2. HALF OF INDIA’S ATMs MAY CLOSE DOWN BY MARCH 2019: The Confederation of ATM Industry (CATMi) has warned that half of India’s  ATMs may face closure due to the changes in regulatory landscape. The Industry body has said that the recent regulatory changes, including those on hardware and software upgrades, coupled with mandates on cash management standards and the cassette swap method of loading cash will make the ATM operations unviable, resulting in the closure. A majority of ATMs that will shut down will be in the non-urban areas which can hamper the financial inclusion efforts put in by the government and the banks.

 

3. SBI’S “YONO” SUSPENDS PAPERLESS ACCOUNT OPENING VIA AADHAAR: Sate Bank of India has temporarily suspended its Aadhaar based online account opening through   its one-stop solution platform- YONO (You Only Need One) since the Supreme Court in its ruling has said that  it is not mandatory to link the 12 digit Unique Identification Number Aadhaar for opening of accounts. As of now the e-KYC is not being permitted and hence the same has been suspended and now they have sought clarification from RBI.

 

4. J&K BANK BROUGHT UNDER RTI, CVC AND STATE LEGISLATURE: The Jammu & Kashmir bank has been brought under the purview of Right to Information (RTI) Act, The Chief Vigilance Commissioner (CVC) guidelines and the State Legislature as per an official release. The State Administrative Council (SAC) has approved that the provisions of Jammu & Kashmir Rights to Information Act 2009, shall be applicable to the bank like any other PSUs. Besides the bank shall follow CVC guidelines. Established in 1938 the J&K Bank Ltd is the only state government promoted bank in the country with the J&K Government holding 59.3% share in the bank. The purpose of SAC’s decision is a step towards strengthening better corporate governance.

 

5. DELHI JUMPS CLOSURE TO MUMBAI’S INCOME TAX COLLECTIONS: Mumbai, India’s Business hub and business capital still contributes 29% of total Income Tax revenues which is the largest chunk. But its share has been falling. Delhi which is the second largest contributor of the tax revenue saw its collections rising by 45% from April to November 2018 this year. Collections in Mumbai rose by a meagre 5%. Slower growth in Mumbai is attributed to hefty refunds and the changing economic landscape of our country.

 

6. RBI TAKES MEASURES TO INCREASE CREDIT FLOWS AS MOST PCA LADEN BANKS MET   MANDATORY PRIORITY LENDING TARGETS: The government feels that putting as many as half of banks in Prompt Corrective Action (PCA) is preventing the credit flow to MSME sector which is highly labour intensive. But an analysis of RBI data on such loans shows that a large majority of banks including those facing PCA have achieved the mandatory priority sector target for Micro Enterprises. The MSME lending has been exempted from most of the restrictions and several steps have been taken by RBI to ease credit flow to this sector.

 

7. PUBLIC SECTOR BANKS’ LOSSES RISE 3.5 TIMES HIGHER IN SECOND QUARTER OF FY’19: The cumulative losses of Public Sector banks has widened nearly 3,5 times to Rs 14, 716 crore in July-September quarter of current fiscal. Higher provisioning towards bad loans has impacted the balance sheets of majority of these banks. Out of this, the loss reported by Punjab National bank was the highest with the bank posting a net loss of Rs 4,532 crore during the said period.

 

WEEKLY FINANCIAL SNIPPETS – 17/11/2018

1. BANKERS’ PANEL INCORPORATES “SASHAKT INDIA AMC: Sunil Mehta, the Chairman of Bankers’ Panel said that an Asset Management Company (AMC) has been formulated for large stressed assets and will be called as “Sashakt India Asset Management” The Bankers’ Panel is working on faster resolution of stressed assets in banks. He further stated that now the panel is working towards identifying potential investors for an Alternative Investment Fund (AIF) which will fund the AMC. In July this year the government had proposed a Five Pronged Strategy under Project Sashakt to tackle large stressed assets and formed a Panel led by Mr Sunil Mehta.

 

2. RBI REFUSES TO GIVE INFORMATION ON NPAs, LOAN DEFAULTERS TO SEBI: Security Exchange Board of India (SEBI) had sought information regarding Non-Performing Assets (NPAs) and Loan Defaulters List from RBI. The Reserve Bank of India has declined to pass on the said information. The denial of RBI to divulge the information is because it fears further data leakage as it becomes known to wider range of people which in turn will hurt the business prospects of the companies involved. The Central Information Commission (CIC) has sent a show-cause notice to the RBI Governor for not providing the information.

 

3. RBI IMPOSES FINE OF Rs. 3.00 CRORE EACH ON DEUTSCHE BANK AND J&K BANK: The Reserve Bank of India has imposed a penalty of over Rs. 3.00 crore each on Deutsche Bank and J&K Bank for non-compliance of various norms, including Asset Classification and The penalties on these two banks have been imposed taking into account the failure of these banks to adhere to the directions issued by RBI.

 

4. SEBI MAY TIGHTEN LIQUID MUTUAL FUNDS: The Securities Exchange Board of India (SEBI) is considering tightening the rules of Liquid Mutual Funds holding assets worth Rs. 8 lakh crore or more. This is to curb the volatility in flows following the challenges faced by the Finance companies in the wake of recent debt default by IL&FS.

 

5. SEBI TIGHTENS DISCLOSURE, REVIEW NORMS FOR RATING AGENCIES: The Securities Exchange Board of India (SEBI) has tightened the disclosure and review norms for Credit Rating Agencies (CRAs). SEBI has ordered CRAs to analyse deterioration in the liquidity conditions of an issuer while monitoring its repayment schedules and also analyse any asset-liability mismatches. SEBI has also instructed CRAs to disclose parameters like liquid investments or cash balances, access to any un-utilised credit lines and adequacy of cash flows in a specific section on liquidity.

 

6. OVER 2 LAKH ASSESSEES WHO MIGRATED FROM VAT TO GST OPTED OUT OF GST NET: Over 2 lakh Goods & Services Tax (GST) assessees have opted out of the GST net as their annual business turnover is below the threshold limit of Rs 20 Lakh. These are assessees who had migrated from the Value added Tax (VAT) regime to GST regime. This will benefit both the GST network and the tax    assessees, as the GST network will now have less load and the concerned assessees will not be required to file the GST returns.

 

7. DIRECT TAX COLLECTIONS TO EXCEED TARGET THIS YEAR: Direct Tax collection as on October 2018 has already crossed Rs. 5 lakh crore which is 44% of the net Direct Tax collection target. At this rate this will cross the budgeted target of Rs. 11.5 Lakh crore for the current fiscal. The Income Tax Department has already issued refund orders amounting to Rs. 1.15 lakh crore and hence from now onwards the net collections will increase.

 

8. HOW DOES RBI BUILDS ITS RESERVES ? : The Reserve Bank of India builds its reserves from several factors. Mainly it is built from three sources. First, by interest on government bonds held for conducting open market operations, fees from governments market borrowing programme and income from investment in foreign currency assets. Second, is earnings retained after giving dividends to government. Third source is revaluation of foreign assets and gold.

WEEKLY FINANCIAL SNIPPETS – 10/11/2018

1. FOUR PUBLIC SECTOR BANKS MAY COME OUT OF PCA SHACKLES: Four Public Sector Banks (PSBs) are expected to come out of the RBI’s Prompt Corrective Action (PCA) framework based on their improved financial performance. The turnaround should happen by the end of the third quarter. This shows that PSBs are diligently and sincerely following the action plan shared with the government. The banks expected to come out of PCA include Bank of India, Corporation Bank and Bank of Maharashtra. The government will site this example to persuade RBI to relax the PCA norms which is one of the issues over which the government and RBI are in conflict.

 

2. GOVERNMENT TO INFUSE Rs. 3,054 CRORE IN ALLAHABAD BANK: The government is releasing Rs. 3,054 crore to Allahabad Bank during the current fiscal. The bank has been informed by the government about the fresh capital infusion of Rs. 3,054 crore towards contribution of the Central Government in the preferential allotment of equity shares. Allahabad Bank’s Capital Adequacy Ratio as per Basel-III stood at 6.88% by the end of first quarter of the current fiscal and the government owned 71.81% stake in the Bank.

 

3. RBI SLAPS Rs. 1 CRORE FINE ON FINO PAYMENTS BANK: The Reserve Bank of India has slapped a monetary penalty of Rs. 1 crore on Fino Payments Bank Ltd for contravention of the direction to stop opening of new accounts until further instructions. Fino Payments Bank was asked by RBI to stop all new account opening activities after the RBI found out that there were few accounts with the bank with deposits in excess of Rs 1 lakh, which goes against the licensing criteria of a Payments bank.

 

4. NBFC FUND CRUNCH BEGINS TO HIT REAL ESTATE SECTOR: With The Non-Banking Finance Companies (NBFCs) facing liquidity crunch, Real Estate Developers and home buyers are being hit badly as in several cases sanctioned home loans are not being released and funds committed earlier under construction linked home loan schemes are also not being released. The cash crunch has also pushed the home loan interest rates by 50 to 100 basis points and for developers the increase can be as much as 300 basis points (which is 3% more). With funds drying up, several smaller NBFCs are trying to liquidate their loan portfolios to raise funds.

 

5. SBI REDUCES DAILY ATM WITHDRAWAL LOMIT TO Rs. 20,000: In an attempt to address the growing incidence of ATM frauds and boost digital transactions, State Bank of India has reduced its daily ATM cash withdrawal limit to Rs. 20,000/- from Rs, 40,000/- earlier on its Classic Debit Cards. This will surely impact many SBI customers since these cards constitute a sizeable chunk of the bank’s card portfolio.

 

6. 75 LAKH NEW TAX FILERS ADDED TO INCOME TAX NET THIS FISCAL YEAR: About 75 lakh new tax filers have been added to the income tax payers list so far in this fiscal year .The number of policy and enforcement measures undertaken to check tax evasion are among the reasons for achieving these numbers. The target is to add 1.25 crore fresh tax filers by the end of this fiscal.

 

7. PROFITS OF PRIVATE SECTOR BANKS TAKE A DENT DUE TO HIGH PROVISIONING: Net Profit of 17 private sector banks fell by 1.6% in September Quarter on account of higher levels of provisioning and contingencies. On account of the new guidelines issued by RBI on Non-Performing Assets in February 2018, many top private sector banks had to raise their provisioning levels compared to last year.

 

8. BANK’S CONSUMER DURABLE LOAN PORTFOLIO FALLS BY 82%: Most of the banks are shying away from disbursing consumer durable loans probably due to the fear of delinquencies. Outstanding loans in this segment dropped to Rs. 3,225 crore in September 2018, a sharp 82% decline compared to last year. This space is taken over by NBFCs as their exposure to consumer durable loans has increased by 41.5%.