Reserve Bank of India – Tenders
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Month: July 2021
Digital India: Paytm sets aside ₹50 crore for reward program
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Celebrating the six year journey of Digital India mission, Paytm, a digital financial services platform, has set aside ₹50 crore for a new program to reward merchants and consumers.
This new program— Guaranteed Cash back offer— seeks to reward merchants and consumers with guaranteed cash backs and also offer Soundbox and IoT devices. Cash backs are offered for every transaction made through the Paytm App.
The offer is applicable for merchants across India, while special on-ground activities will be held in over 200 districts to train merchants on digitisation and reward for increased adoption of cashless payment, a statement issued by Paytm said.
Merchants with the most number of transactions made through Paytm app before Diwali, will be rewarded with certificates for being the top merchants and will also receive free Soundbox, IoT devices and many such rewards, the statement added.
“India has made significant strides in its Digital India mission, which empowers all with technological advancements. This mission is bound to contribute to the country’s growing economy. We are honoured to be a part of the digital transformation of our country. Paytm’s Guaranteed Cashback offer is to recognise the top merchants, who are at the heart of India’s growth and have made Digital India a success.” said Vijay Shekhar Sharma, Paytm Founder & CEO.
Abhishek Singh, President and CEO, Digital India Mission said, “Over the last six years, the Digital India mission has grown leaps and bounds to put India on the global innovation map. We are happy to have Paytm and Vijay Shekhar Sharma, who has put their faith in this mission and is a true leader of the Indian entrepreneurial ecosystem. Paytm’s Guaranteed Cashback offer will encourage India’s millions of merchants to trust digital payments and come on the path of innovation and contribute to the cashless economy.”
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Reserve Bank of India – Press Releases
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Edelweiss Group divests stake in Edelweiss Gallagher Insurance Brokers
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Edelweiss Group on Friday announced the divestment of its 70 per cent stake in Edelweiss Gallagher Insurance Brokers Ltd (EGIBL).
“Gallagher, who previously held 30 per cent in the business, will now be acquiring all the remaining shares, taking its stake to 100 per cent,” it said in a statement, adding that the transaction is subject to approvals by the Insurance Regulatory and Development Authority of India.
In a regulatory filing, Edelweiss said the transaction is likely to be completed within 10 months.
A total of 37 lakh equity shares of ₹10 each representing 70 per cent of the paid up share capital of EGIBL will be sold for a consideration of ₹307.60 crore, in one or more tranches, it further said.
“In addition to the sale consideration, the company will also be entitled to receive a deferred contingent consideration based on the future revenue of EGIBL, in the manner set out in the Agreement,” it further said.
“This acquisition of the remaining shares of EGIBL will help enable a deeper integration with Gallagher’s global operations, helping scale up the business significantly,” Edelweiss Group further said, adding that it will also give clients access to a larger suite of insurance products and services.
The business will rebrand to Gallagher in the coming months.
Edelweiss Group will focus on growing its life and non-life insurance businesses.
Gallagher and Edelweiss entered into a partnership in May 2019. EGIBL offers general insurance solutions and operates across four areas of corporate, affinity and association, reinsurance and global and digital solutions.
“We believe in doing what is right for the business and the customer and integrating the business with Gallagher will give it a global edge and achieve our objectives. It also provides us with the flexibility to reallocate capital and invest in scaling up our fast-growing life and non-life insurance businesses, making this a win-win for both of us,” said Rashesh Shah, Chairman, Edelweiss Group.
“We view India as a key and strategic market for the insurance industry and for Gallagher, given its scale and growth potential, and we see many interesting opportunities for further development of the business,” said Vyvienne Wade, Gallagher Chairperson of Global Broking in Europe, Middle East, and Asia.
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ED serves notices for Euro Cup betting, games, misuse of cards, BFSI News, ET BFSI
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The Enforcement Directorate (ED) has shot hundreds of notices in the past one month to individuals for using international credit and debit cards to bet on Euro Cup matches, remitting funds for real money games (RMG) to offshore platforms, and not surrendering pre-loaded forex cards which are often preferred during foreign tours.
Also, several non-resident Indians (NRIs) have received notices for their transactions during the last one year while having overstayed in India in 2020-21 due to Covid-19. The law enforcement agency, which issued the notices under the Foreign Exchange Management Act (FEMA), is also questioning inflow and outflow of money for crossborder trades in Bitcoin and other cryptocurrencies on overseas crypto exchanges.
According to two persons aware of the ED action, the number of notices may have touched 1,000 in the past two months. “Most of the individuals who have come under attention are from Mumbai, Delhi, Pune, and Bengaluru,” said an ED official.
“Many have used international cards to place football bets with sites, which though legitimate services in those countries, may be considered a violation under FEMA. The re-use of preloaded forex cards is mostly out of carelessness, and may not be a conscious violation,” said another person.
Technically, under the regulations, a preloaded card can be used only by a person to whom the card has been issued. Also, a traveller is expected to return the card to the issuing bank. Many, however, let friends, family members and colleagues travelling abroad use their cards if there is unspent money.
“The real money gaming transactions have attracted the agency’s attention with the receipt of funds in several savings bank accounts… banks these days are quick to flag these off in their suspicious transaction report,” said a FEMA consultant.
While use of foreign exchange for online betting and gambling is construed as violation of foreign currency rules, as far as cryptos go, there is some division of opinion in the legal fraternity, with some under the impression that funds can be remitted under the Reserve Bank of India’s liberalised remittance scheme for buying digital assets abroad.
“But it’s unfortunate if NRIs are pulled up for FEMA violation because they could not fly out of India within the required period. Since they were stuck, there have been a higher number of transactions in their accounts during their stay here. This may have drawn ED’s notice,” said one of the sources.
According to current rules, NRIs staying for 182 days or more have to pay tax on their global income, while NRIs spending 120 days or more (but less than 182 days) have to pay tax on the total income, other than the income from foreign sources, as long as such earnings exceed Rs 15 lakh.
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With advance POS terminals BFSI companies are scaling up merchant’s businesses, BFSI News, ET BFSI
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With the proliferation of the point-of-sale (POS) technology, BFSI companies have been adding different layers consistently. The POS terminal has also strengthened the merchant’s business.
How does POS create opportunities for merchants?
How does POS create opportunities for merchants?
POS is the point where retail transactions take place. It is a replacement for a cash register but is more functional. From payments to emailing the customers, from operations management to selling insurance covers, the POS world is burgeoning with opportunities and this means swelling possibilities to optimise the business and earn higher revenues.
Inventory Management
For small businesses where there are only a handful of employees, inventory can be controlled efficiently via POS machines. It can track the best-selling products or services based on the sales. All previous transactions can be looked up through POS and inventory can be tracked and products can be reordered in case of low stock. Before getting a POS system, ensure that it has a separate inventory management software or has the capability to integrate well with yours.
Almost all businesses have an online address apart from the brick and mortar store. POS can even help businesses integrate and streamline the sales from all locations.
Employee Management
Softwares in the POS hardware can even help merchants track the performance of the employees. Individual sales by employees, their checking in and out time, how far they are from their sales targets, a lot can be monitored. This will also help employees to improve their strategies and get to their targets faster.
Customer Relationship
Sending an SMS or an email thanking the customer soon after the purchase can also be set via POS. Customers’ style and previous purchases can be looked into and marketing and advertising can be customised to boost sales. Insights from the customer can help the merchant help them better.
Cloud for managing business data
Every businessman doesn’t ace data analytics and POS saves them from this necessary headache. Reports can be created relating to tax, best selling products and even inventory. Just knowing about your profits or total sales isn’t enough, pointing at what worked and what didn’t is beneficial for long-term success of the business. You need to know what has been lying on the shelves and what has been running out of stock. A cloud-based POS system helps in reaching these data points. Merchants can understand which days are the busiest and which employee is working exceptionally well and crossing targets. These reports won’t only help optimise the payroll but also make other staffing and operational decisions convenient.
Diversifying the revenue source
When a POS terminal is set up in a nearby kirana store or neighbourhood shops, anybody can come and withdraw or deposit cash. Instead of travelling to a distant ATM or a bank branch, one can head there. The merchant can advertise its own store and products on the POS system as well. This will attract eyes and also increase the chances of a sale happening. This is a way to double the revenue sources for small businesses.
Not just cash but even insurance can be sold via these terminals. The mobile POS and mobile payments solution provider, Mswipe offers insurance for two-wheelers. Even Spice Money delivers this product to its users. There’s also the provision of a micro-credit facility for merchants. Spice Money offers it with a ticket size of INR 30,000 to 40,000 via its own POS machines.
Merchants that employ the POS terminals don’t charge the consumer directly for using these services but do have the power to stretch up the prices of their products and services. So, it is a profitable way for businesses to upscale their operations and raise revenues.
Expanding payment options
Different customers prefer contrasting payment modes and not just one. With POS, credit cards, debit cards, mobile wallets, QR codes and even the UPI mode is accepted, thus allowing businesses to cater to all.
A POS system has been strengthening the merchants’ businesses and has a scope for a lot more. From restaurants to salons, the POS market is growing gradually in India. As per the RBI’s vision, the expectation of 5 million PoS terminals by the end of 2021 has already been fulfilled during FY20 with 5.1 million terminals.
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6 Gold Investments To Make As Gold Prices Fall Sharply
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ICICI Prudential Gold ETF
Instead of buying gold, we suggest investors to buy Gold ETFs. They can be bought if you have a demat and trading account, just as you buy shares. These instruments follow gold prices, so when gold prices go higher, gold ETF prices go higher and when they fall the instrument prices fall.
ICICI Prudential Gold ETF has seen its prices fall from peak levels of Rs 54 to the current levels of Rs 41.78. The prices have fallen by more than 20%, which makes the instrument very attractive for long term investors.
We believe that in the longer term gold prices could trend higher, which could benefit investors who have invested in ICICI Prudential Gold ETF. Over the last 1-year this ETF has given a return of negative 3.74%.
HDFC MF Gold ETF
This is another ETF that has slumped tracking gold prices. Since gold rates have fallen substantially over the last few weeks, HDFC Gold ETF too has seen a price drop.
In fact, the ETF price, which was as high as Rs 53.26 is now trading at just Rs 41.91. At the moment gold prices have fallen over the last few months on account of a reduction in import duty in the Union budget and also a hint by the US Fed on interest rates rising by 2023.
When interest rates rise gold prices fall, as investors put money into fixed income securities and pull money away from gold. This makes the short term fall as a good buying opportunity in an ETF like HDFC MF Gold ETF.
Kotak Gold ETF
Those who invested a year-back in this ETF are now making losses. In fact, over the last 1-year this Gold ETF has given a negative returns of 2.2%. But, for those buying the ETF now, it could be a good bet over the longer term.
The fund size is around Rs 1,800 crores and the fund tracks domestic gold prices, which in turn track international prices of gold.
As mentioned, Gold ETFs track gold prices and if gold prices go higher, these ETF prices would go higher. Gold Exchange Traded Funds are a better bet than physical gold, as they are held in electronic form and can be easily bought and sold on the exchanges.
Nippon India ETF Gold BeES
This is another ETF that has fallen over the last 1-year, prompting us to suggest a buy on the ETF. The 1-year returns is negative 3.2%. In fact, it is one of the biggest Gold ETFs with sizeable assets under management of more than 6,000 crores. In case, you wish to buy, you can talk to your broker. It’s important to remember that Gold ETFs like all other category of investments are taxable.
In the above, we have only mentioned Gold Etfs, because we believe it is the best substitute instead of buying physical gold. There is hardly any spread that is involved when you buy and sell gold ETFs. Let us explain. If you buy physical gold of 22 karats you would end up paying Rs 45,000, but, when you sell you might get just Rs 43,000 per 10 grams.
In Gold ETFs, as we watch the buyer and sellers, we find that ICICI Prudential Gold ETFs has a buy at Rs 41.93 and sell at 41.96, the spreads are so narrow, ensuring profits for investors.
SBI Gold ETF
In line with the trend of falling gold prices, SBI Gold ETF has given negative returns of almost 3% in the last 1-year. The year to date returns for the ETF is -7.07%.
For investors, who want to hedge their risk and diversify their portfolio the SBI Gold ETF may not be a bad bet. As can be seen from the data, the fund’s performance is not too great. This leaves investors and opportunity to buy, because of the drop in value.
Axis Gold ETF
Axis gold ETF has hit a 52-week high of 53 and is now available at 40.98. This means the fund is available more than 20% below its 52-week high. Importantly it is very close to its 52-week low of Rs 38.39, making it a good ETF to bet on.
Those who wish to diversify their portfolio away from equities, this is not a bad bet.
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Here’s How Much Money You Can Send Abroad From India?
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Planning
oi-Vipul Das
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The Foreign Exchange Management Act, 1999 defines the statutory context for the management of foreign exchange transactions in India. Under the Foreign Exchange Management Act (FEMA), 1999, all transactions encompassing foreign exchange are categorised as either capital or current account transactions. All residents, including minors, are entitled to remit up to USD 2,50,000 each financial year for any authorised current or capital account transaction, or both, under the Liberalised Remittance Scheme (LRS). For all LRS transactions performed through authorised persons, the resident individual must give his or her Permanent Account Number (PAN).
The number of remittances is unrestricted under the LRS. However, throughout a financial year, the overall amount of foreign exchange acquired from or sent through all channels in India should not exceed USD 2,50,000. A resident citizen would not be entitled to make any additional remittances under this scheme after making one for an amount up to USD 2,50,000 during the financial year. However, depending on the form of remittance, you may encounter some limitations on the amount you need to send.
For example, if you are a customer of State Bank of India, you are entitled to the current limit of USD 2, 50,000 each financial year under the RBI’s Liberalised Remittance Scheme (LRS). Within the total threshold of LRS, per transaction cap is equivalent to Rs.20 lacs or USD 25,000, whichever is lower on the day of transaction if made through a bank branch. Within the total limit of LRS, each transaction cap through Retail Internet Banking (INB) is equivalent to Rs.10 lacs or USD 25,000, whichever is lower on the day of transaction. This service is accessible in USD, GBP, EUR, AUD, SGD, CAD, and 91 other currencies at all SBI branches.
Is foreign remittance is taxable in India?
Money remitted outside India will be subject to a 5% tax collected at the source (TCS). The TCS rate will be 0.5 per cent of the money sent if the transfer is paid out against a loan acquired for higher education. In this context, the Finance Act of 2020 added a new sub-section (1G) to Section 206C. TCS will apply to remittances that are transferred outside of India under the Reserve Bank of India’s Liberalized Remittance Scheme (LRS). LRS permits residents to transfer up to $250,000 each fiscal year to cover expenditures such as travel, medical care, education, gifts and donations, upkeep of the close family, and so on. Indian citizens can also establish, and manage foreign currency accounts with banks outside of India for the purpose of carrying out the scheme’s authorized transactions. Needless to say, unless tax has already been deducted at source (TDS), every overseas transfer above Rs 7 lakh would be subject to a tax-collected-at-source (TCS). Please remember that the TCS will only apply to the amount over Rs 7 lakh in a given financial year.
Story first published: Friday, July 2, 2021, 9:47 [IST]
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Banks tank up on capital but corporate loan demand is missing, BFSI News, ET BFSI
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Bank credit growth to the industrial sector decelerated 0.8% year-to-date as of May 21, 2021, due to poor loan offtake from the corporate sector.
It slowed the non-food credit growth to 5.9 per cent in May 2021, as compared to 6.1 per cent in the year-ago month, RBI data showed.
On the other hand, personal loans registered an accelerated growth of 12.4 per cent in May 2021, as compared to 10.6 per cent a year ago, primarily due to accelerated growth in vehicle loans and credit card outstanding.
What’s up?
Corporates are preferring to deleverage debt and waiting it out for the pandemic to end before committing any new capital expenditure. They are retiring high-cost bank loans by tapping the bond markets where funds are available for cheaper rates.
Banks anticipate a loan demand surge from retail as the pandemic ebbs in the year ahead. However, the corporate loan demand is not yet on horizon.
Loans to industry
Loans to industries were 1.7% higher on year as of May 22, 2020, according to data on sectoral deployment of bank loans in May released by the Reserve Bank of India.
The RBI said that the fall in loans extended to industries was mainly because credit to large industries contracted by 1.7% compared to a growth of 2.8% a year ago.
However, credit to medium industries registered a robust growth of 45.8% compared to 5.3% in the previous year, and those to micro and small industries registered a growth of 5.0% versus a contraction of 3.4%.
Within the industrial sector, mining and quarrying, food processing, textiles, gems and jewellery, wood and wood products, paper and paper products, glass and glassware, infrastructure, leather and leather products, rubber, as well as plastic and plastic products registered higher growth in May.
On the other hand, credit to beverages and tobacco, petroleum coal products and nuclear fuels, vehicles, vehicle parts and transport equipment, basic metal and metal products, cement and cement products, all engineering, chemicals and chemical products and construction decelerated, RBI said in a release.
Fiscal 2021
Growth in credit to the private corporate sector, however, declined for the sixth successive quarter in the fourth quarter of the last fiscal and its share in total credit stood at 28.3 per cent. RBI said the weighted average lending rate (WALR) on outstanding credit has moderated by 91 basis points during 2020-21, including a decline of 21 basis points in Q4.
Overall credit growth in India slowed down in FY21 to 5.6 per cent from 6.4 per cent in FY20 as the economy was hit hard by Covid. and subsequent lockdowns.
Credit growth to the industrial sector remained in the negative territory during 2020-21, mainly due to the COVID-19 pandemic and resultant lockdowns. Industrial loan growth, on the other hand, remained negative during all quarters of 2020-21.”
The RBI further said working capital loans in the form of cash credit, overdraft and demand loans, which accounted for a third of total credit, contracted during 2020-21, indicating the impact of the coronavirus pandemic.
Shift to bonds
The corporate world focused on deleveraging high-cost loans through fundraising via bond issuances despite interest rates at an all-time low. This has led to muted credit growth for banks.
Corporates raised Rs 2.1 lakh crore in December ended quarter and Rs 3.1 lakh crore in the fourth quarter from the corporate bond markets. In contrast, the corresponding year-ago figures were Rs 1.5 lakh crore and Rs 1.9 lakh crore, respectively.
Bonds were mostly raised by top-rated companies at 150-200 basis points below bank loans. Most of the debt was raised by government companies as they have top-rated status.
For AAA-rated corporate bonds, the yield was 6.85 per cent in May 2020, which fell to 5.38 per cent in April 2021 and to 5.16 per cent in May 2021.
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Digit Insurance raising $200 million in funding
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Insurtech startup Digit is raising up to $200 million with existing investor Faering Capital and new investors Sequoia Capital India, IIFL Alternate Asset Managers and a few others, in their latest round of funding.
This is subject to IRDAI approval.
“This will bring the total capital infused into Digit Insurance up to $442 million, valuing it at $3.5 billion,” it said in a statement on Friday.
Digit saw a smaller round in January 2021, wherein it was valued at $1.9B.
“We will continue to focus on increasing insurance penetration and simplifying processes through technology. Customer service remains our key focus,” said Kamesh Goyal, Chairman and Founder, Digit Insurance.
Prem Watsa, Chairman, Fairfax Financial holdings, the first investor in Digit Insurance, said, “It was a difficult year for economies the world over but I am glad to see Digit continuing to stick to its mission of simplicity and growing ahead of the industry. Their relevant products, tech-enabled, simple processes and customer-centric approach sets them apart. My best wishes to the team.”
Amongst Digit’s investors are also TVS Capital Funds, A91 Partners, Indian Cricket Team Captain (Men’s) Virat Kohli and the employees of Digit.
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