WEEKLY FINANCIAL SNIPPETS- 16/02/2019

  1. FINANCE MINISTRY ASKS 6 PSU BANKS TO PERFORM BETTER TO COME OUT OF PCA: The Finance Ministry has asked six  banks who are under Prompt Corrective Action (PCA) to improve on seven parameters to get the government’s support  for coming out of PCA framework. These six banks have been told to improve upon Net Interest Margins (NIMs), CASA (Current & Savings Accounts) Risk Weighted Assets (RWAs), NPA Recognition, Divergence (disparity in loan recognition), Operating Profit and Non-Core asset selling to be able to come out of PCA framework.

 

  1. FINNACE MINISTRY IS WITHIN REACH OF ACHIEVING NPA RECOVERY TARGET: The Finance Ministry is on course to meet the NPA recovery target of Rs 1.80 Lakh crore by March 31, 2019 with the recoveries already touching Rs. 1.08 lakh crore. The bigger ticket loan recoveries are due and will be recovered by March end from Essar Steel and Bhushan Power Steel which together may fetch Rs. 60,000/- crore.

 

  1. INDIVIDUAL INSOLVENCY CODE MAY SOON COME IN TO FORCE: The Chairman of The Insolvency & Bankruptcy Board of India Mr. M S Sahoo has said that individual insolvency code will be introduced soon. Three sets of individuals will fall under the Individual Insolvency Code. They would include personal guarantor to corporate debtors, proprietary firms and individual borrowers. The government is in the process of putting in place a broad framework on individual insolvency code and once this is introduced, failure to repay home loans might drag future defaulters to dedicated bankruptcy courts in future.

 

  1. GOVERNMENT RAISES LIMIT FOR DISCLOSURE OF STOCK/MUTUAL FUND INVESTMENTS FOR EMPLOYEES: Group A and B government officers were to disclose such details if the total investments in shares and mutual funds etc exceeded Rs. 50,000/- during a calendar year. This limit has been increased to six months of their basic pay. This is in accordance with an order issued by Personnel Ministry.

 

  1. REAL ESTATE SECTOR IS LIKELY TO GET MUCH AWAITED GST RELIEF: A group of State Finance Ministers have decided to recommend a GST rate cut for under-construction projects to 5% from the current 12% and slashing of GST rate to 3% from the present 8% for affordable Housing Projects. However the proposed change in GST rates structure would be accompanied by denial of Input Tax Credit (ITC) to the builders.

 

  1. IICA LAUNCHES GRADUATE PROGRAMME FOR INSOLVENCY PROFESSIONALS: The Indian Institute of Corporate Affairs (IICA) has launched the Graduate Insolvency Programme (GIP) for individuals aspiring to join the insolvency profession in India and abroad. This is among the first of its courses in the world for professionals dealing with insolvent companies and helping them achieve debt resolution. This programme is approved by the Insolvency Bankruptcy Board of India. It is a two year programme comprising of one year of residential classroom and another year of internship. An individual is eligible to do the programme if he has 10 years of post-membership experience as a Chartered Accountant, Company Secretary, Cost Accountant, Advocate or 15 years of management experience after completion of his graduation.

 

  1. PUNJAB NATIONAL BANK TO e-AUCTION 4,000 PROPERTIES TO RECOVER BAD LOANS: Punjab National Bank said that it has decided to place more than 4,000 properties all over India on e-auction as part of its loan recovery effort. According to the bank, the e-auction under the Securitisation and Reconstruction of Financial Assets & Enforcement of Securities Interest Act (SARFAESI) will help achieving the recovery of Rs 26,000 crore during the current Financial Year.

 

 

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WEEKLY FINANCIAL SNIPPETS- 09/02/2019

  1. CRITERIA FOR BULK DEPOSIT FOR BANKS RAISED TO 2 CRORE: The Reserve Bank of India in its latest monetary policy has decided to raise the criteria of bulk deposits for banks from the existing Rs. 1 crore to Rs. 2 crore. This is done to provide more operational freedom to lenders to raise funds. Banks have been given discretion to offer differential rate of interest on the bulk deposits as per their requirements and Asset Liability Management (ALM) projections. Interest rates on bulk deposits are marginally higher than the smaller amount of deposits for similar maturity period.

 

  1. RBI RAISES THE LIMIT FOR COLLATERAL-FREE FARM LOANS: The Reserve Bank of India has raised the loan limit for collateral-free farm loans to Rs. 1,60,000/- from the existing limit of Rs. 1,00,000/- in view of the overall inflation and also considering the rise in agricultural input costs. RBI also said that it would set up an internal working group to examine issues pertaining to agricultural loans.

 

  1. SEBI COMES OUT WITH RULES TO REVIEW PERFORMANCE OF PUBLIC INTEREST DIRECTORS: Securities and Exchange Board of India (SEBI) has come out with a strict framework for Public Interest Directors (PIDs) serving at Stock exchanges, Clearing Corporations and Depositories. Now the PIDs will be nominated for a period of three years to be extendable by another term of three years. This will be subject to a performance review.

 

  1. BANKS NEED Rs 20 LAKH CRORE DEPOSITS FOR HEALTHY CREDIT GROWTH: As per a report by credit rating agency CRISIL, banks need to raise an amount of nearly 20 lakh crore in deposits by March 2020 for a healthy credit growth. The report further says that the healthier private sector banks will account for about 60% of the incremental deposit mobilisation. In the last few years the deposit growth rate has dropped due to lower rate of interest offered by the banks as compared to other financial avenues. This additional deposit mobilisation drive will put pressure on the interest rates and as a result the interest rates may go up.

 

  1. RBI PLANS “UMBRELLA ORGANISATION” FOR URBAN COOPERATIVE BANKS: The Reserve Bank of India plans to set up an “Umbrella Organisation” for Urban Cooperative Banks (UCBs) to improve their operational and financial health as per best global practices. Reserve Bank of India further said that to make UCB sector financially stronger and to enhance depositors’ confidence, it is decided to set up the Umbrella Organisation   as prevalent in many countries. The Umbrella Organisation thus formed will extend liquidity and capital support besides setting up an information and technology infrastructure to enable these UCBs to widen their services at a relatively lower cost.

 

  1. RBI TO REGULATE PAYMENT GATEWAY PROVIDERS: Reserve Bank of India proposes to regulate payment gateway service providers and payment aggregators. This is another move to make digital payments safer. This would mean that payment gateways such as Paytm, Mobikwik etc would have to adhere to RBI guidelines just as any other financial entities. Consequently these gateways will become more transparent, accountable in their workings, thereby benefitting the common man using these digital payments.

 

  1. RBI TO ASSIGN RISK WEIGHTS FOR BANK EXPOSURES TO NBFCs: The Reserve Bank of India will now assign risk weighted rating exposures of banks to all Non-Banking Finance Companies. RBI said that the guidelines for this would be issued by the end of February. With a view to facilitate flow of credit to well-rated NBFCs, it has now been decided that rated exposures of banks to all NBFCs would be risk weighted. This will be as per the rating assigned by the accredited rating agencies, in a manner similar to that for Corporates which is being followed now by all banks.

 

  1. PUBLIC SECTOR BANKS TO BE RANKED ON THE BASIS OF PERFORMANCE: The government will start surveying Public Sector banks annually to rank them on their performance parameters ranging from profitability to customer satisfaction. The parameters include customer responsiveness, financial inclusion, digital platforms and security. Further financial performance will be assessed on the basis of recoveries made, return on asset and differentiated banking strategy.

Blog – INTERIM BUDET – 2019 IN NUTSHELL

DIRECT TAX

** 99.54% of Income tax Returns thus filed have been accepted as having been filed without any scrutiny.

** Standard Deduction limit raised to Rs. 50,000/- from the existing Rs. 40,000/- {Section 16(IA)}

** Tax on deemed rent from 2ND house abolished. This means that the benefit of self-occupied property has

been increased from one house property to two house properties. The income tax on notional rental

income will not be taxed on the second house property {section 23(4)}.

** The limit for tax rebate under section 87A increased from Rs. 3,50,000/- to Rs. 5,00,000/- , thereby the

tax savings would be Rs 12,500/- instead of earlier Rs. 2,500/-. This means that for a taxable income up

to Rs. 5,00,000/- there would be “ZERO” tax. Around 3 crore Tax Payers would be benefitted by this

** TDS on bank deposits/Post office Savings deposit increased to Rs 40,000/- from Rs. 10,000/- {Section

      194A}.

** TDS limit for rent from properties has been increased to Rs. 2,40,000/- from Rs. 1,80,000/- {Section 194I}.

** Within next 2 years almost all verification/assessments of the tax returns selected for scrutiny will be done

electronically manned by tax experts/officials without any manual intervention and without any interface

between   tax payers and tax officials

** It is proposed that within next 2 years income tax returns will be processed in 24 hours and refund will be

issued simultaneously.

** Exemption under Section 54 will be available on the purchase of two house properties provided the capital

gain is  up to  Rs 2.00 crore. The benefit can be availed only once in a lifetime.

 

AGRICULTURE

** Farmers owning land up to 2 hectares to get Rs. 6,000/- per anum under Pradhan Mantri Kissan Yojna 12

      crore Farmers to be benefitted under the scheme.

** Farmers affected by natural calamities to get 2% interest subvention and additional 3% interest

subvention for timely repayment of loan

** Farmers pursuing the activities of animal husbandry and fisheries, who avail loan through Kisan Credit Card

to get 2% interest subvention and further 3% interest subvention in case of timely repayment.

 

OTHERS

**Proposed Pension scheme under Pradhan Mantri Shram-Yogi Maandhan.  Pradhan Mantri Shram-Yogi

Maandhan that offers a pension of Rs. 3000/- per month after the age of 60 to unorganised sector workers

with monthly income of up to Rs. 15000/-. Under the scheme, an unorganised sector worker joining pension

Yojana at the age of 29 years will contribute Rs 100/- per month till the age of 60 while a worker joining at

the age of 18 will have to contribute Rs. 55/- per month. This would be matched by an equal contribution by

the government to the pension account. This is being termed as the World’s biggest pension scheme.

Around 42 Crore unorganised sector workers would be benefitted by this.

**Time limit for attachment of property under Prevention of Money Laundering Act 2002, to be hiked from 90

days to 365 days.

**To promote “ Make in India” concept , the Customs duty to be abolished on 36 capital goods.

                                                                            

MSME SECTOR

**GST registered SME enterprises will get 2% rebate on interest charged to them on their loans up to Rs. 1

crore.

**SME with a turnover of up to Rs. 5 crore to file GST returns on quarterly basis as against the monthly returns

as of now.

 

DEFENCE

** Defence Budget to cross Rs. 3,00,000 lakh crore for the first time ever.

 

In our opinion this interim budget is populist and election oriented budget for the benefit of lower and lower middle class. These provisions will put a stress on the fiscal deficit of the country.

WEEKLY FINANCIAL SNIPPETS- 02/02/2019

  1. DIRECT TAX COLLECTION EXCEEDS THE TARGET IN FINANCIAL YEAR 2019: The government had originally budgeted the Direct Tax collections at Rs 11.50 Lakh crore in current financial year 2018-19 which includes Corporate Tax and Personal Income Tax. The government has estimated to collect Rs 12.00 lakh crore this fiscal which is Rs. 50,000 crore more than the estimated target. Out of this, Rs. 6.71 Lakh crore is from corporate tax and Rs. 5.29 Lakh crore is from Personal Income Tax. For the Financial year 2019-20 the budget estimated target is Rs 13.80 lakh crore.

 

  1. GOVERNMENT ANNOUNCES PENSION SCHEME IN BUDGET 2019: Interim Finance Minister Mr. Piyush Goyal has announced Pradhan Mantri Shram-Yogi Maandhan that offers a pension of Rs. 3000/- per month after the age of 60 to unorganised sector workers with monthly income of up to Rs. 15000/-. Under the scheme, an unorganised sector worker joining pension Yojana at the age of 29 years will contribute Rs 100/- per month till the age of 60 while a worker joining at the age of 18 will have to contribute Rs. 55/- per month. This would be matched by an equal contribution by the government to the pension account. This is being termed as the World’s biggest pension scheme.

 

  1. GST COLLECTIONS TO MISS THE BUDGETED TARGET FOR FINANCIAL YEAR 2018-19: GST collections by the Centre will miss the budgeted target set for current financial year by Rs 1 lakh crore. The government had estimated to collect over Rs. 7.43 lakh crore from GST in the current financial year but however the collections would be Rs 6.43 lakh crore. The total indirect tax collection for financial year 2019-20 has been estimated at Rs 7.61 lakh crore.

 

  1. THREE PSU BANKS COME OUT OF PCA: As per Reserve Bank of India statement, Bank of India, Bank of Maharashtra and Oriental Bank of Commerce are out of the Prompt Corrective Action (PCA). Reserve Bank of India has eased operational curbs on these three banks on account of the marked improvements in the capital positions and asset quality. Now these banks would be allowed to open branches and extend loans freely.

 

  1. IRDAI ASKS INSURERS TO MAKE PROVISIONS FOR IL&FS EXPOSURE: Industry Regulator IRDAI has instructed Insurance Companies to make provisions for their exposure to the crippled infra lender IL&FS. The IL&FS group with a debt of over Rs. 94,000 crore has been defaulting on its financial obligations  since August 2018 and has also borrowed from insurance companies but the exact amount of exposure to the industry is not yet immediately known. These exposures cannot be written off and these insurance companies will have to make provisions for the said exposures.

 

  1. SENIOR MANAGEMENT AT ICICI BANK TO HAVE NO TITLES: ICICI Bank has decided to scrap designations at senior management level to inspire more efficient teamwork by making processes less hierarchical. Designations at the bank will now be indicative of the function or the job that a person is expected to perform. Executives at the senior management level will now have the job title of “Head” followed by their function or department as it will be a role based designation aligned with appropriate decision-making powers so that the bank can respond to market opportunities in a faster manner.

 

  1. ICICI BANK ASKS CHANDA KOCHHAR TO RETURN BACK ALL PERFORMANCE BONUSES: ICICI Bank’s internal inquiry has found that former Chief Executive Chanda Kochhar violated disclosure norms on conflict of interest and her exit from the bank will not be treated as normal resignation but as dismissal. Now the bank has asked her to return back all the bonuses awarded to her during her tenure and she stands to lose all dues along with all the stock options that would have accrued to her.

WEEKLY FINANCIAL SNIPPETS—26.01.2019

1. COMPANIES TOLD TO DISCLOSE DUES TO MSME SECTOR: In its latest attempt to improve the liquidity crunch faced by Micro, Small & Medium Enterprises (MSMEs) and to bring in more transparency, the government is mandating all companies to disclose arrears (payables) of more than 45 days to MSMEs. Corporate Affairs Ministry is expected to notify the rules within a few days. In future every company will have to make half yearly disclosures regarding the unpaid bills to MSMEs. The government has clarified that the rules are in line with what is prescribed in the law governing MSME sector and the same is being implemented now.

2. YES BANK PARTNERS WITH MAHARASHTRA GOVERNMENT FOR ELECTRONIC PDS: Yes Bank has partnered with Maharashtra Government for the state government’s e-PDS State Programme to enrol Fair Price Shops as Business Correspondent Agents. Yes bank will enrol around 40% Fair Price Shops across the state and this will cover more than 20,000 ration shops and over 70 lakh citizen. This facility will enable Fair Price Shops to provide banking services such as small value deposits and withdrawals from any bank account via Aadhaar-enabled payment system. These shops will also be able to collect digital payments through Aadhaar enabled payment for ration and also will provide value added services like bill payments and mobile recharge.

3. NON-ITR FILERS TO SUBMIT INCOME TAX RETURN OR REPLY TO TAX QUERY WITHIN 21 DAYS: The Finance Ministry has identified several individuals as potential non-filers who have carried out high value transactions in the Financial Year 2017-18 (Assessment Year 2018-19) but have still not filed their Income Tax Returns (ITRs)for FY 2017-18. These Non-Filers have been asked to assess their tax liability for F Y 2017-18 and file their tax returns or submit online response within 21 days.

4. GOVERNMENT TO SEEK SPECIAL DISPENSATION FROM RBI FOR IL&FS CRISIS: Following the crisis at IL&FS late last year, some of the companies of the diversified IL&FS group, which has a debt of over Rs. 91,000 crore, have failed to repay loans. This has raised concerns over liquidity in the system and hence the Corporate Affairs Ministry has superseded its board by deciding to approach the RBI for seeking a special dispensation for deferment of provisioning requirements for bank loans extended to IL&FS since the group is expected to come out of the trouble as it is planning to monetise some of its assets.

5. NO e-WAY BILLS FOR NON-FILERS OF GST RETURNS: Non-filers of GST returns for consecutive six months will be barred from generating e-way bills for movement of goods. The Service Tax Network is developing a new IT system wherein such businesses that have not filed GST Returns for consecutive six months will not be able to generate e-way bills. The new rules will be notified and will bring in to force once the new IT system is ready.

6. RBI ANNOUNCES Rs. 10,000 CRORE BOND BUYBACK TO IMPROVE LIQUIDITY POSITION: The Reserve Bank of India has announced a Rs. 10,000 crore bond buyback under its Open Market Operations (OMO). RBI has committed to purchase an aggregate amount of Rs. 50,000 crore government securities under OMO and so far has purchased Rs. 30,000. The latest purchase of Rs. 10,000 crore is based on the assessment of prevailing liquidity conditions and it is a continuing effort by RBI to provide adequate liquidity.

7. CANARA BANK PROPOSES TO SELL ITS STAKE IN SIDBI AND NSDL: Canara Bank proposes to sell one crore shares in Small Industries Development Bank of India (SIDBI). It has invited bids at a floor price of Rs. 225/- per share. The bank also proposes to sell 4 lakh shares in NSDL at a floor price of Rs.850/- per share.

8. GOVERNMENT SACKS TWO PUNJAB NATIONAL BANK EXECUTIVES: The government has removed Mr. K Veera Brahmaji and Mr. Sanjeev Saran, two senior executives of Punjab National Bank from the office of Executive Director with immediate effect for failing to prevent the $2 billion Nirav Modi fraud.

WEEKLY FINANCIAL SNIPPETS—19.01.2019

  1. DEPOSITORS READY TO TAKE HAIRCUT TO SAVE KAPOL BANK: For the first of its kind in the history of Indian Banking, the Depositors of the troubled Kapol Co-operative Bank Ltd have drawn up a plan to revive the stressed bank. Around 2.5 lakh depositors, under the banner of Kapol Trustee (Public Interest Efforts), have submitted an 5 point plan to RBI which offers to convert 35% of their deposits in to Bank’s share capital, conversion of 25% of their deposits in to 3 year FDs, conversion of 37% of their deposits to reducing balance accounts and straight forfeiture of 3% of all savings. However this seems to be a long drawn process as the administrator appointed by RBI must approve the plan. This will be followed by the RBI physically scrutinizing whether the consent given by each depositor is valid or not.

 

  1. EDELWEISS PRIVATE CREDIT FUND RAISES Rs. 9,200 CRORE FOR INVESTMENT IN STRESSED ASSETS: Edelweiss Alternative Asset Advisors Ltd, a unit of Edelweiss Financial Services Ltd has raised Rs. 9,200 crore ( $ 1.3 billion) for investments in stressed assets through its India fund. The private credit fund is looking at making investments in stressed assets with an aim to turn around the Non-Performing Asset. These investments could be a combination of last- minute financing, financial restructuring and operational turnaround assistance.

 

  1. GOVERNMENT TO INFUSE Rs. 6,000 CRORE IN EXIM BANK: The government is infusing a sum of Rs. 6,000 crore in Exim Bank thereby doubling its share capital to Rs. 20,000 crore. The equity will be infused in two instalments. Rs. 4,500 crore in 2018-19 and Rs. 1,500 crore in 2019-20. The Cabinet has already approved the infusion of the said funds. The said infusion would help the bank to expand its business.

 

  1. GET INCOME TAX REFUND WITHIN A DAY FROM 2020: From the year 2020, the e-filing tax payers will get their refund orders within a day through a pre-filled tax return form. Currently the average time taken for tax return processing and giving a refund is 63 days and this will be reduced to just one day. The Cabinet has cleared this ambitious project of Rs. 4,242 crore for e-filing and centralised processing of income tax returns.

 

  1. NEW e-COMMERCE RULES MAY BOOST PROFITS OF SMALL RETAIL STORES: Tighter norms for  e-Commerce players may be a boon for small retail businesses as their profits are bound to grow by around Rs. 10,000-12,000 crores in 2020. This is as per a report by CRISIL. In December 2018 the government has introduced new regulations for e-Commerce players that would bar on-line marketplaces with foreign investments from selling products of companies where they have a stake and ban exclusive marketing arrangements.

 

  1. GOVERNMENT PLANS TO PREVENT COMPOSITION DEALERS FROM CHARGING GST FROM ITS BUYERS: The Revenue Department is planning to introduce a mandatory rule for Composition Dealers and Service Providers to declare their GST Registration Status in invoices to ensure that they do not charge GST from the buyers. The measure when implemented would check the practice of Composition Dealers of collecting GST from the buyers and not depositing the same with the government.

 

  1. PSU BANKS WITHDRAW AID TO GRAFT ACCUSED’S LEGAL BATTLE: In a setback to hundreds of bankers facing corruption related charges, the government has advised PSU Banks to withdraw any legal or financial support to fight cases, especially when the bank itself is a complainant. At present a committee within the bank decides the cases in which financial and legal support is provided. Now the Finance Ministry has said there is no question of providing support to bankers in cases that are filed by the lender itself. In the second category, where the case is filed by the investigating agency, the government has left it to lenders to take decisions based on the merits of the case.

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.

 

  1. 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).

 

  1. 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.

 

  1. 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/-

 

  1. 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.

 

  1. 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.

 

  1. 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.

 

  1. 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 1st April 2019.

 

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.

 

  1. 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.

 

  1. 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.

 

  1. 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.

 

  1. 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.

 

  1. 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.

 

  1. 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.

 

  1. 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.

 

  1. 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.

 

  1. 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.

 

  1. 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.

 

  1. 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.

 

  1. 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.

 

  1. 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.

 

  1. 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.