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The Reserve Bank of India will conduct a Variable Rate Reverse Repo auction on May 21, 2021, Friday, as under:
2. The operational guidelines for the auction as given in the Reserve Bank’s Press Release 2019-2020/1947 dated February 13, 2020 will remain the same. Ajit Prasad Press Release: 2021-2022/238 |
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NARCL is the name coined for the bad bank announced in the Budget 2021-22. A bad bank refers to a financial institution that takes over the bad assets of lenders and undertakes resolution.
The size of each of these NPAs accounts is over Rs 500 crore and the banks have identified about 70-80 such accounts to be transferred to the proposed bad bank, sources said.
It is expected that NPAs over Rs 2 lakh crore will move out of the books of the banks to the bad bank, they added.
The company will pick up those assets that are 100 per cent provided for by the lenders.
Finance Minister Nirmala Sitharaman in the Budget 2021-22 announced that the high level of provisioning by public sector banks of their stressed assets calls for measures to clean up the bank books.
“An Asset Reconstruction Company Limited and Asset Management Company would be set up to consolidate and take over the existing stressed debt,” she had said in the Budget speech.
It will then manage and dispose of the assets to alternate investment funds and other potential investors for eventual value realisation, she added.
Last year, the Indian Banks’ Association (IBA) had made a proposal for the creation of a bad bank for swift resolution of non-performing assets (NPAs). The government accepted the proposal and decided to go for asset reconstruction company (ARC) and asset management company (AMC) model for this.
NARCL will pay up to 15 per cent of the agreed value for the loans in cash and the remaining 85 per cent would be government-guaranteed security receipts.
The government guarantee would be invoked if there is a loss against the threshold value.
The Reserve Bank of India (RBI) has said that loans classified as fraud cannot be sold to NARCL. As per the annual report of the RBI, about 1.9 lakh crore of loans have been classified as fraud as of March 2020.
To facilitate the smooth functioning of asset reconstruction companies, the RBI last month decided to set up a panel to undertake a comprehensive review of the working of such institutions.
After enactment of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act in 2002, regulatory guidelines for ARCs were issued in 2003 to enable the development of this sector and to facilitate the smooth functioning of these companies.
Since then, while ARCs have grown in number and size, their potential for resolving stressed assets is yet to be realised fully.
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The All India Bank Depositors’ Association (AIBDA) has requested the Reserve Bank of India (RBI) to advise banks to reduce their operating cost and prune the net interest margin, so that the entire burden of cut in interest costs does not fall on depositors.
The Association, in its pre-monetary policy memorandum to RBI, underscored that the depositors in the small income earner and senior citizen categories are suffering the most due to the current negative real interest rate (adjusted for inflation).
“While a pause in repo rate is desirable to support growth at this point in time, too much liquidity in the market works adversely against the depositors without a significant increase in bank credit. As depositors are major stakeholders and risk bearers in the financial system, their interests should not be ignored,” said DG Kale, President and Amitha Sehgal, Honorary Secretary, AIBDA.
They cautioned that a negative real interest rate may increase the wedge between savings and investment in the economy going forward and hamper growth in the long run.
The Association observed that since February 7, 2019, the repo rate (interest at which RBI provides liquidity to banks to overcome short-term mismatches) has been reduced by 250 basis points and has remained unchanged at 4 per cent since May 5, 2020.
Moreover, the RBI has made a liquidity provision of over ₹13-lakh crore in 2020-21.
Flush with liquidity amidst sluggish demand for credit, commercial banks reduced term deposit rates nearly by 200 basis points, it added.
The AIBDA office bearers opined that banks could take a cue from government’s decision not to cut the interest rates on Small Savings Schemes.
“In a deregulated environment, it may not be possible for the RBI to re-regulate deposit rates. But the entire burden of cutting interest costs should not fall on depositors. We would like to reiterate that the one-year real deposit rate should be at least 2 per cent for saving-investment equilibrium to be maintained at a reasonably high level,” Kale and Sehgal said.
The Association said no charge should be imposed by the card-issuing bank in case of a failure of transaction at ATM/POS.
Referring to banks imposing a fee every time there is a transaction decline at an ATM or point of sale (POS) due to insufficient balance in the account, the AIBDA reasoned that such transactions are nowhere at par with cheque/ECS returns. These charges are currently of the order of ₹25 + GST.
“It (declined POS/ATM transactions due to insufficient balances) does not involve any intent of systemic inconvenience or distrust to a third party. We would like to mention that NPCI does not consider it as a transaction and there is no cost imposed by NPCI/ acquirer bank onto the card-issuing bank,” said Kale and Sehgal.
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Planning
oi-Roshni Agarwal
In a tweet LPG gas provider, Indian Oil Corporation in its annual results announced for FY 2020-21, highlighted the company’s customer centric initiative and that included:
1. Indane Extra Tej (LPG i.e. more efficient)
2. India’s highest octane XP 100 and XP 95 Premium petrol for high performance vehicles
3. Chhotu 5kg LPG cylinder
4. LPG booking facility via missed call
5. Combo cylinder and Niche composite cylinder
#IndianOilAnnualResults pic.twitter.com/A7T2zecKVP
— Indian Oil Corp Ltd (@IndianOilcl) May 19, 2021
So while the second service is for vehicle owners, the rest of the services are all households who have an Indane connection.
1. Indane Extra Tez:
Under this service customers shall be offered a premium quality of LPG or liquefied petroleum gas. This not only shall reduce the cooking time but also make healthier food which shall come as a savior in this hour of the pandemic.
2. Chhotu 5kg LPG cylinder:
This chhotu LPG cylinder being offered by IOC can be bought by households that don’t have much LPG usage. Further it can be procured from your LPG agency or the petrol pump dealer.
3. Booking Indane LPG or cooking gas cylinder via missed call:
Amid the pandemic, IOC has started a gas booking service by just giving a missed call from the mobile number registered with the agency. The move will also help those Indane customers who are not comfortable using IVRS facility. The number for the same that IOC has designated is 8454955555.
4. Combo cylinder:
In hours like this when you may get deliveries of LPG cylinders, you can prepare yourself by opting for combo cylinder that come as 14.2 kg LPG cylinder and another 5kg cylinder.
Now that as you use LPG cylinders, there is always of risk of some accident on account of it and for the same you also are covered. Read on to know more about it.
GoodReturns.in
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Detailed results will be issued shortly. Ajit Prasad Press Release: 2021-2022/237 |
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The Finance Ministry has notified final rules for foreign investment limit of 74 per cent in the insurance sector, which came into effect on May 19, 2021.
The new arrangement is expected to benefit 23 private life insurers, 21 private non-life insurers and 7 specialised private health insurance companies. Considering the capital required for pandemic induced expansion needs, finalisation of rules will be helpful for the insurance sector, officials feel.
One of the major proposals is the additional layer of solvency margin for higher limit of foreign investment. It prescribes 50 per cent of net profit in a financial year needs to be retained in the general reserve provided the solvency margin is lower than 1.2 times of the control level of solvency and the payment of dividend on equity shares.
Solvency margin is the excess of value of assets over the value of liabilities. Similarly, solvency ratio refers to the ratio of the amount of Available Solvency Margin to the amount of Required Solvency Margrin. At present, IRDA prescribes this ratio at 150 per cent.
The rules also stipulate that for an Indian insurance company having foreign investment — majority of its directors, key management persons, and at least one among the chairperson of its Board, its managing director and its Chief Executive Officer — will be a Resident Indian Citizen.
Any Indian insurance company having foreign investment, “existing on or before the date of commencement of the Indian Insurance Companies (Foreign Investment) (Amendment) Rules, 2021, shall within one year from such commencement comply with the requirements,” of rules related with management persons, it further stipulates.
Total foreign investment here would mean the sum of both direct and indirect foreign investment. Direct investment by a foreigner will be called Foreign Direct Investment, while investment by an Indian company (which is owned or controlled by foreigners) into another Indian entity is considered as Indirect Foreign Investment.
Foreign investment up to 26 per cent was permitted in the insurance sector in 2000. Later, in 2015, this limit was raised to 49 per cent.
According to a State Bank of India analysis, the pandemic has shown that there is need for further penetration of insurance in India and for that capital infusion is required. The report, using March 2019 data, said average FDI investments in the 23 private life insurers is only 35.5 per cent, 30 per cent in 21 non-life private insurers and 31.7 per cent in 7 specialised health insurance companies.
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On May 17, internationally the prices of gold gained $29 and this after breaking an immediate resistance of $1852 suggests that gold price are no longer range bound but are trending higher. Also, there has been a couple of factors working in the favour of gold such as continuing economic distress, rising inflation concern, substandard employment and retail numbers from the US together with geo-political unrest between some of the economies.
Now the latest sharp fall in cryptocurrencies price not to forget the bitcoin currency which fell by a huge 30% to $30K from its highs of just under $65K hit last month, is also pushing for gold’s appeal as a safe haven. It is to be noted amid inflation and other concerns such as the volatility in stock markets, cryptocurrencies and particularly bitcoin was being accorded a status similar to gold i.e. of being a hedge against inflation, currency debasement and ‘as a store of value’ but now this is resulting for a pullback from the bitcoin investment.
Certainly amid volatility, the proceeds from bitcoin investment may find its way to gold which again gains appeal as a safe haven and bitcoin may lose it on the sharp fall.
Suggestion to gold investors:
Gold this expected to test 48,800- Rs 49,400 in this week and any dips close to Rs. 47900 could be an ideal entry point to take long position in the bullion with a stop loss of Rs. 47400
In its minutes of FOMC meet released on May 19, 2021, the US Fed maintained that it could easy buying in case if the US economy shows strong economic growth momentum at a rapid pace. This easing or tapering of bond buying programme in the US will result in reduced liquidity globally and hence there shall be witnessed outflow from emerging markets in both the debt and equity markets. This outflow of USD outside adds to pressure on the currency.
Rupee-dollar rates influence gold rate in India,(Note international gold rates do not get influenced by rupee-dollar movement) because gold is primarily imported and if rupee weakens against the dollar then gold’s price in rupee terms will trend upwards.
So, the likely tapering or easing of policy by the world’s developed economy may be another factor triggering gold rates higher.
There is also a case that on easing in liquidity, there will be pressure on the international gold rates, which might fall a big 5 percent from here as said by experts. So, the impact of the currency fall shall not be as drastic as the impact of foreign gold rates on Indian gold rates, which may then see steadiness on negating factors i.e. sharp correction in bitcoin at one end and decline in foreign gold rates on the other.
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Taxes
oi-Vipul Das
Dealing in high-value cash transactions will get you in touch with the notice of the Income Tax Department or on the radar of tax authorities. Banks, mutual fund houses, brokerages, and property registrars all indulge in cash-related transactions. These establishments must report high-value transactions to the Income Tax Department if they exceed a certain threshold. The Income Tax Department has arrangements with numerous government agencies to acquire financial records from individuals who engage in big-ticket transactions but do not report them on their tax filings. Here are some examples of transactions that may put you on the tax authorities’ radar and result in tax notice as well:
Cash deposits in bank FDs should not exceed Rs 10 lakh. It is also not recommended for a bank depositor making a cash deposit in a bank FD account to exceed the Rs 10 lakh cap. The Central Board of Direct Taxes (CBDT) has declared that banks must disclose if an individual deposits more than the stated limit in one or more fixed deposits.
An individual’s cash deposit cap in a bank account is Rs 10 lakh. If a savings account holder deposits more than Rs 10 lakh in a financial year, the income tax department may issue an income tax notice. Since cash deposits and withdrawals in a bank account exceeding Rs 10 lakh or more in a financial year must be disclosed to the tax authorities, you must be cautious if you surpass the stated limit. In the case of current accounts, the cap is Rs 50 lakh or more.
According to the CBDT, payments of Rs 1 lakh or more in cash against credit card bills must also be reported. In addition, if a payment of Rs 10 lakh or more is paid in a fiscal year to settle credit card bills, the payment must be disclosed to the tax department. One of the most important considerations is the income tax that applies to credit card transactions. Be careful you don’t go over your credit card spending cap, since the Tax authority keeps track of credit card transactions as your credit card details are linked with your PAN Card, and thus it is managed online by the government. Any big-ticket transaction must be disclosed while filing an ITR. If you use your credit card on any high-value transactions, make sure to disclose them on Form 26AS while filing your ITR to avoid getting an income tax notice.
The property registrar should have to disclose any purchase or sale of immovable property for an amount of Rs 30 lakh or more to the tax authorities. The property purchase/sale transaction must be reported on your Form No.26AS. Well, if you’re buying or selling a property for more than Rs.30 Lakhs, you’re on the Income-tax Department’s radar. The Income Tax Department may examine whether the buyer has reported the income on his or her tax return to offset the investment made in the buying of a property, and whether the seller has properly reported capital gains and tax.
Individuals who invest in mutual funds, stocks, bonds, or debentures must ensure that their cash transaction in these investments does not exceed Rs 10 lakh. Failure to adhere to this cash transaction cap may result in the tax authority auditing your most recent tax return (ITR). The I-T department has created an Annual Information Return (AIR) statement of financial transactions to keep track of high-value transactions of taxpayers. Tax officials will collect details against unusual high-value transactions on this basis in a financial year. If any investment or transaction has been classified as a high value transaction, verify the AIR section of your Form 26AS. PART-E of your Form 26AS includes details about high-value financial transactions.
An amount of Rs. 10 Lakh or more in a fiscal year for receipt by any individual for the sale of foreign currency, along with any credit in such currency to a foreign exchange card, or payment in such currency via a debit or credit card, or issuance of a traveller’s cheque, draft, or other instrument, must be declared to the income tax department.
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E-Tender No. RBI/Central Office/DBS/4/20-21/ET/748 Please refer to the tender notice for the captioned tender published on the Bank’s website www.rbi.org.in on May 07, 2021 inviting applications for tender for Annual Maintenance Contract (AMC) and Facility Management Service (FMS) for Computer Hardware, Software and peripherals at RBI, Department of Supervision, Central Office, Mumbai and Legal Department, Central Office, Mumbai. 2. The Earnest Money Deposit guidelines have been revised as under:
3. All other terms and conditions of the captioned tender remain unchanged. T K Rajan |
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