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Karnataka Bank plans to raise Rs 6,000 cr via debt, BFSI News, ET BFSI

Banking & Finance

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New Delhi: Karnataka Bank plans to raise up to Rs 6,000 crore debt capital during the current financial year, and it will seek shareholders’ approval in the ensuing AGM next month. Besides, the private sector lender has also planned to raise equity capital by issuing 15 crore shares through a qualified institutional placement (QIP).

Its annual general meeting (AGM) is scheduled for September 2.

On the debt raise plan, it said that in the normal course of business, a bank borrows money to meet its business requirements through various means and to meet its capital requirements.

Accordingly, it is proposed to obtain consent of the members of the bank for borrowing funds in Indian/foreign currency up to Rs 6,000 crore in the form of debt instruments, in one or more tranches, Karnataka Bank said in its annual report 2020-21.

On the QIP plan, approval of the members will be sought to create and offer, for cash at such price that the “total number of fully paid-up equity shares to be issued shall not exceed 150,000,000 (150 million) equity shares, to be subscribed by QIBs,” it said.

The equity shares are to be offered in one or more tranches.

“The board, at various intervals, has felt the need for onboarding institutional investors. In this direction, the bank has started strategising initiatives. Besides, maintaining sufficient capital adequacy ratio improves the bank’s risk appetite given the COVID-19 pandemic-led economic uncertainties,” it said.

In view of these, the board of directors thought fit to seek approval of the shareholders for augmenting capital through QIP, it said.

The private sector lender posted a net profit of Rs 482.57 crore in FY21, up by nearly 12 per cent from a year ago. However, the total income was down marginally at Rs 7,727 crore.



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IBA moves RBI seeking licence to set up 6k-cr NARCL, nod likely soon, BFSI News, ET BFSI

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New Delhi: The Indian Banks’ Association (IBA) has moved an application to the Reserve Bank of India (RBI) seeking licence to set up a Rs 6,000-crore National Asset Reconstruction Company Ltd (NARCL) or bad bank, according to sources.

NARCL was incorporated last month in Mumbai following the registration with Registrar of Companies (RoC).

According to sources, the company after mobilising an initial capital of Rs 100 crore and fulfilling other legal formalities has approached the RBI seeking licence to undertake asset reconstruction business.

The RBI in 2017, raised the capital requirement to Rs 100 crore from the earlier level of Rs 2 crore, keeping in mind the higher amount of cash required to buy bad loans.

RBI has its process and procedure for granting licence for such business, sources said, adding, it could take next few weeks to obtain licence from the regulator.

RBI’s approval could come either in September or October, sources added.

Legal consultant AZB & Partners has been engaged to seek various regulatory approvals and fulfilling other legal formalities.

IBA, entrusted with the task of setting up a bad bank, has put a preliminary board for NARCL in place. The company has hired P M Nair, a stressed assets expert from State Bank of India (SBI), as the managing director.

The other directors on the board are IBA Chief Executive Sunil Mehta, SBI Deputy Managing Director S S Nair and Canara Bank’s Chief General Manager Ajit Krishnan Nair.

Finance Minister Nirmala Sitharaman in Budget 2021-22, announced that the high level of provisioning by public sector banks of their stressed assets calls for measures to clean up 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 manage and dispose the assets to alternative investment funds and other potential investors for eventual value realisation, she had said. ba



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FM to launch National Monetisation Pipeline, BFSI News, ET BFSI

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New Delhi: Finance minister Nirmala Sitharaman on Monday will launch the National Monetisation pipeline (NMP), which will list out the government’s infrastructure assets to be sold over the next four-years, an official statement said.

“The NMP comprises a four-year pipeline of the central government’s brownfield infrastructure assets. Besides providing visibility to investors, NMP will also serve as a medium-term roadmap for the asset monetisation initiative of the government,” the Niti Aayog said in a statement on Sunday. Department of Investment and Public Asset Management (DIPAM) Secretary Tuhin Kanta Pandey had earlier this month said that the government is finalising Rs 6 lakh crore worth infrastructure assets, including national highways and power grid pipelines, which would be monetised.

“A national monetisation plan of about Rs 6 trillion is in the offing which will have a range of assets from pipelines to power grid pipelines to national highways, ToT (toll-operate-transfer) and so on,” Pandey had said.

The Union Budget 2021-22, laid a lot of emphasis on asset monetisation as a means to raise innovative and alternative financing for infrastructure.

In her Budget speech, Sitharaman had said that monetising operating public infrastructure assets was a very important financing option for new infrastructure construction. agencies



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Xiaomi to offer full spectrum of financial services in India via partners, BFSI News, ET BFSI

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Chinese handset maker Xiaomi is doubling down on its financial services business. It is diversifying into the full spectrum of lending platforms, with a clear focus on the payments, lending and insurance verticals.

“Financial services are no longer a subset as it is large enough in Hong Kong, India and China to be an independent business,” Manu Jain, managing director of Xiaomi India, told ET.

Xiaomi’s financial services vertical is now operating as an independent business due to the market size and the company’s renewed focus.

Under its lending services bouquet, Xiaomi has started offering business loans, gold loans and credit line card services.

Its financial services business returned to growth mode with a 95% jump in revenue in the March quarter over the October-December period in 2020.

“We’ve seen 35% on-year growth in Q1 of (calendar) 2021 despite a dip after the Covid-19 second wave… we are again growing at a significant pace despite the market downturn in the last two quarters,” Jain said.

The financial services business is running as a marketplace for various partners who offer services on Xiaomi’s platform, said Ashish Khanderwal, Head, financial services of Xiaomi India.

Xiaomi is working with Axis Bank, IDFC Bank, Aditya Birla Finance, Money View, Early Salary and Credit Vidya for lending services.

For the line credit card offering, it has partnered with Stashfin, while the health and cyber insurance service is being offered in partnership with ICICI Lombard.

Jain said the company has disbursed over 100,000 loans with credit of up to Rs 25 lakh and is operating across 22,000 pin codes. Mi Pay, he said, is growing rapidly with a 50 million pan-India user base.

On whether Xiaomi would venture into the growing cryptocurrency segment, Jain said, “We await clarity on the regulatory front…crypto is an interesting area, and is the biggest buzzword and doing exceptionally well.”

Two years ago, Xiaomi had invested in Bengaluru-based startup KrazyBee for the Mi Credit service. On startup investments, Jain said the new regulations require certain approvals before it can make an investment.

“…we would want to be 100% compliant with all local laws at every level, so no immediate investment plans,” Jain said.



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Karnataka Bank plans to raise Rs 6,000 crore via debt

Banking & Finance

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Karnataka Bank plans to raise up to Rs 6,000 crore debt capital during the current financial year, and it will seek shareholders’ approval in the ensuing AGM next month.

Besides, the private sector lender has also planned to raise equity capital by issuing 15 crore shares through a qualified institutional placement (QIP).

Its annual general meeting (AGM) is scheduled for September 2.

On the debt raise plan, it said that in the normal course of business, a bank borrows money to meet its business requirements through various means and to meet its capital requirements.

Accordingly, it is proposed to obtain consent of the members of the bank for borrowing funds in Indian/foreign currency up to Rs 6,000 crore in the form of debt instruments, in one or more tranches, Karnataka Bank said in its annual report 2020-21.

On the QIP plan, approval of the members will be sought to create and offer, for cash at such price that the “total number of fully paid-up equity shares to be issued shall not exceed 150,000,000 (150 million) equity shares, to be subscribed by QIBs,” it said.

The equity shares are to be offered in one or more tranches.

“The board, at various intervals, has felt the need for onboarding institutional investors. In this direction, the bank has started strategising initiatives.

“Besides, maintaining sufficient capital adequacy ratio improves the bank’s risk appetite given the COVID-19 pandemic-led economic uncertainties,” it said.

In view of these, the board of directors thought fit to seek approval of the shareholders for augmenting capital through QIP, it said.

The private sector lender posted a net profit of Rs 482.57 crore in FY21, up by nearly 12 per cent from a year ago. However, the total income was down marginally at Rs 7,727 crore.

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Institutions need separate deposit insurance cover: Sahakar Bharati

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The Deposit Insurance and Credit Guarantee Corporation (DICGC) needs to carve out a separate deposit insurance limit for institutions to help them overcome the difficulty in placing deposits with multiple banks, according to Sahakar Bharati.

Institutional depositors such as educational institutions, charitable and religious trusts, co-operative credit and housing societies park their deposits with various banks to get the benefit of deposit insurance cover. However, management of funds can become onerous once their corpus starts growing.

Higher cover

Sahakar Bharati, the all-India body of co-operative institutions, wants the Finance Ministry to consider modifying DICGC’s deposit insurance scheme so that institutional depositors get a separate and higher deposit insurance cover of ₹25 lakh and management of funds becomes easier.

DICGC (a wholly-owned subsidiary of the Reserve Bank of India), with the approval of Government of India, had upped the limit of insurance cover for depositors in the insured banks five-fold to ₹5 lakh per depositor with effect from February 4, 2020.

Also read: Sahakar Bharati seeks Sec 80C benefit for term deposits of 5 years and above with UCBs

With the revised deposit insurance cover, the proportion of bank deposits (by amount) with insurance cover, rose to 50.9 per cent of assessable deposits as of March-end 2020 vis-a-vis 27.4 per cent without increase in the cover.

Satish Marathe, Founder-Member, Sahakar Bharati, and Director, Central Board, Reserve Bank of India, observed that if a co-operative credit society wants to deploy surplus funds of, say, ₹1 crore, then to get the benefit of deposit insurance cover it will have to park the monies in at least 20 banks.

He emphasised that if institutional depositors have a separate and higher deposit insurance limit of ₹25 lakh, the number of banks they will be required to park their deposits with will come down drastically, making fund management less cumbersome.

This demand assumes significance as the funds of institutional depositors are stuck in some of the urban co-operative banks, which have either been placed under RBI directions or are getting liquidated.

For example, in scam-hit Punjab and Maharashtra Co-operative (PMC) Bank, fixed deposits of institutional depositors such as the Reserve Bank Officers’ Co-operative Credit Society Ltd (₹105 crore) and the Reserve Bank Staff & Officers Co-operative Credit Society Ltd (₹86.50 crore) are stuck.

Given that about 49 per cent of the assessable deposits do not have insurance cover, Marathe felt that banks should be permitted to obtain additional deposit insurance cover on such deposits of individuals and institutions by payment of additional premium.

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8 Best GST Billing Software For Small Business In 2021

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1) Vyapar GST

Vyapar is a simple, free GST accounting program that also helps with invoicing and billing. The GST-compliant software is designed for small and medium-sized businesses and is primarily used for automated tax computations, invoice production, POS machine management, and financial report generation.

2) Zoho GST Invoice Software

The free edition of Zoho GST billing software is a professional tool for filing invoices and automatically creating payment reminders.

Small and medium businesses can also use this GST invoice software to take card payments and design invoices to match their brand image. It’s also one of India’s best free billing programs. This enables businesses to send clients automated payment reminders. You can produce invoices, make faster payments, and manage projects using Zoho.

3) Clear tax GST

3) Clear tax GST

For free GST billing, return filing, and inventory management, ClearTax is one of the top GST billing software options. It also aids in the creation of customized invoices with the logo of the specific company.

It’s a full GST filing software package with up-to-date upgrades to ensure that the tax deducted while billing is consistent. ClearTax is simple to use and adheres to the most recent government GST laws. For Indian taxpayers, ClearTax acts as a financial hub. The company’s objective is to help tens of thousands of Indian enterprises, businesspeople, and others streamline their accounts and save money and time.

4) MARG GST Software

4) MARG GST Software

Marg GST software provides a full GST solution, from billing to filing returns. Even if users lack in-depth accounting knowledge, this software allows them to make entire invoices in GST format and handle all of their money. MARG Billing is one of the best GST invoicing software programs available, with all of the capabilities needed to run a small business or a franchise. It’s one of the top GST software options on the market, with modules for retail, ERP, manufacturing, distribution, payroll, and accounting.

5) Tally.ERP 9

5) Tally.ERP 9

Tally ERP 9 is accounting software that helps companies manage their finances. It can keep track of multiple businesses in a single file. And, depending on the service, provide a multi-billing model. It also oversees the business’s financial flow by keeping track of payables and receivables. For Indian enterprises, Tally.ERP 9 is one of the top GST software options. To deliver correct invoices, it conforms to all of the government’s GST-related compliances.

It also assists with other modules such as accounting, inventory, banking, and payroll. Tally. ERP 9 is appropriate for both SMEs and large corporations.

6) Sleek Bill

6) Sleek Bill

One of the top GST billing software in India is Sleek Bill. It’s a useful billing program that generates invoices. This tool was created specifically for the Indian market. You may create and design invoices using the user-friendly interface. It also has GST integrations and extensive billing features.

Sleek Bill is one of the most accurate and fast invoicing and billing software for SMEs, with all of the capabilities they need. With the free GST billing software, you can easily complete both offline and online accounting/billing chores. As a result, you are free to utilize the program to calculate GST, manage taxes, and create invoices.

7) SAG Infotech- Gen GST

7) SAG Infotech- Gen GST

SAG Infotech Private Limited’s Gen GST software is a comprehensive GST solution built and developed for both desktop and web use. The software allows you to fill out infinite returns for an unlimited number of clients.

Anyone can download Gen GST for free, or they can use the GST SaaS service to work on a cloud-based platform that is accessible from anywhere and gives support for GST billing, e-filing, and E-way bill purposes to small enterprises and other persons in India without any problems. It assists businesses with a variety of tasks, including generating and maintaining bills and invoices, filing reports, managing ledgers, and creating GST e-way bills.

8) ProfitBooks GST

8) ProfitBooks GST

In India, ProfitBooks is a popular GST accounting software. It’s an easy-to-use accounting program designed for developing enterprises. This platform has been able to attract a number of firms. SMEs use ProfitBooks GST accounting software to track their spending, manage their inventory, and much more. ProfitBooks allows you to create clear, informative invoices and accept payments via internet payment gateways. ProfitBooks allows you to make invoices, maintain inventory, and manage taxes, among other things. With time, this tool has improved and currently includes a number of GST-compliant functions.

Note: Make sure to check the website before making any decision.



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How does no claim bonus work

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Two friends, Dom and Kabir, meet over a cup of tea and find themselves discovering some goodies in vehicle insurance.

Kabir: I see that your new car is well maintained even after a year. Congratulations.

Dom: Yes, not a scratch in the past year. My family is finally convinced that I can drive. And judging by the premium charged for renewing my car insurance, even my insurer seems happy with my performance.

Kabir: Why, did he waive your payment?

Dom: No, but he did give me a good discount. While going through the renewal rates, I found that I automatically got what is called a ‘no claim bonus’. This brought down my premium by 20 per cent. This got me curious, and after some reading I found that as a reward for not making any claims during a year, you get a discount on the premium you pay. The initial 20 per cent discount gradually increases up to 50 per cent, after five continuous years of making no claims on your policy.

Kabir: So, a sizeable discount on your premium, which must come to ₹12,000-15,000 per year, I believe.

Dom: Not so fast, this discount is applicable only on own damage cover, which is only a portion of your premium charge. Depending on individual policies, a large part of the premium will be towards the compulsory third party insurance cover, which is not taken into account for no claim bonus discount calculations.

Kabir: Do you have to stick with the same insurer over the entire five-year period to enjoy the discount?

Dom: No, that is not so. ‘No claim bonus’ is owned by the policyholder and is transferable to any insurance provider of his choice and also to any new vehicle that the policy holder may insure while replacing his earlier vehicle. The policyholder has to generate a certificate proving that no claims have been made in the past year and get a relevant discount on his/her premium. Note, the bonus cannot be transferred to another policyholder who acquires the vehicle. That person will be charged according to the rates relevant to his/her policy.

Kabir: Ok, sounds fair. But you stand to lose the discount after a claim. Right?

Dom: Yes, the discount resets to zero after you make a claim. So you have to make a calculated call on the benefit from the claim versus the loss of discount on your next renewal price. But, I came across an add-on feature that a few insurance providers are offering that can let you keep your no claim discount even when you make a claim up to a certain pre-determined limit.

Kabir: So, in effect, responsible and accident-free use of a vehicle will be rewarded through lower premiums. A fair practice, indeed.

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Is it mandatory to file income tax returns, by only referring to Form 26AS?

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What head of income is the compensation received on compulsory acquisition of a house with plot taxable under? Or is it exempt?

Rajan NA

Section 45(5) of the Income Tax Act, 1961 (the Act) deals with taxability of capital gains pursuant to compulsory acquisition of capital asset under any law. A house with plot is a capital asset and gains arising due to compulsory acquisition shall be taxed under the head ‘Capital Gain’. Depending on the period of holding the capital gains may have to be categorized as long-term or short-term .

The query is related to tax deducted at source. Is it mandatory to file income tax returns, by only referring to Form 26AS? I am yet to receive Form 16/16a from the deductor. In another case Form 26AS doesn’t reflect amounts appropriately, partly they have allowed partly they have not given credit. I request you to please clarify what can be claimed as tax paid now, in ITR?

Sivalingam

Income earned during the financial year needs to be offered to tax while filing the tax return in India. An individual is required to collate details of all income earned during the financial year, like salary income, rental income, interest income, etc. and consider the same for tax filing, regardless of whether there has been tax deduction on such income. It may be noted that the details reflected in the Form 26AS are based on the withholding tax returns filed by tax deductor. It is important to reconcile the income and taxes reported in Form 26AS before filing the tax return. The central processing unit (CPC) checks the accuracy of the amounts offered in the tax return by comparing it with 26AS and raises queries in case of discrepancies. Therefore, in case of any difference in the amount, you are required to connect with the deductor so that necessary corrective action can be undertaken which should then reflect in Form 26AS.

The writer is Partner, Deloitte India

Send your queries to taxtalk@thehindu.co.in

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HC to liquidator, BFSI News, ET BFSI

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Panaji: The high court of Bombay at Goa has directed the liquidator of Madgaum Urban Co-operative Bank S V Naik to take necessary steps expeditiously to provide relief to depositors from Curtorim, Macazanna, St Jose de Areal, Raia and others.

“The liquidator will have to pursue the matter with Deposit Insurance and Credit Guarantee Corporation (DICGC), so that at least depositors maintaining balance of less than Rs 5 lakh receive the amount up to Rs 5 lakh, in terms of the insurance scheme. Even the depositors maintaining a deposit of above Rs 5 lakh will be entitled to receive the amounts up to Rs 5 lakh under the scheme,” the court held.

“The liquidator should process all such claims as expeditiously as possible so that there is no undue delay in the matter,” stated the division bench comprising Chief Justice of the Bombay high court Dipankar Datta and Justice Mahesh Sonak.

The residents from Curtorim and neighbouring villages in Salcete, in a letter to the high court in September last year, stated that almost 8,000 account holders mostly agriculturists, fishermen, tenants and labourers had deposited their hard-earned earnings in the bank, which had now gone into liquidation.

They stated that they were not being permitted to withdraw any amount over Rs 5,000 from their bank accounts in terms of directives dated May 3, 2019 issued by the RBI and highlighted the immense difficulties faced by them, particularly during Covid-19 pandemic on account of being unable to access their bank accounts.

During the pendency of the petition, the limit for withdrawal was enhanced from Rs 5,000 to Rs 30,000 and on January 19, the high court directing RBI to consider whether the limit could be further enhanced to Rs 50,000 since Adv C A Coutinho, the counsel for the bank, submitted that the grievances of no less than 49,500 depositors from out of a total of 58,000 depositors would be redressed with the enhancement of such limit.

Assistant general manager of RBI, Sandra Rodrigues submitted to the high court on August 17 that in the present situation, where an order of liquidation or winding up of an insured bank has been made, every depositor in respect of his deposit in the bank shall be entitled to receive up to Rs.5 lakh from in accordance with the provisions of the Deposit Insurance and Credit Guarantee Corporation Act, 1961.

The court was told that almost 55,999 depositors had deposits of less than Rs 5 lakh with the bank and such depositors would therefore be entitled to receive amounts up to Rs 5 lakh from DICGC. This would leave about 636 depositors having a deposit of over Rs 5 lakh.



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