Rupee records 2nd biggest gain in 10 years

http://www.financialexpress.com/news/rupee-records-2ndbiggest-10yr-gain/968367/0

The rupee today logged its second-biggest gain in nearly a decade up a whopping 119 paise to settle at a two-week high of 55.61 a dollar on robust capital inflows amid clarity on tax-avoidance rules and unexpected steps unveiled by EU to support the region's financial system.

With the Finance Ministry late last night announcing the draft guidelines on the much-feared General Anti-Tax Avoidance Rules (GAAR) giving clarity to foreign investors, the rupee, tracking robust stock market opening, resumed strong at 56.55 at the Interbank Foreign Exchange (Forex) market.

With FIIs pumping over Rs 3,000 crore today in shares, the huge dollar supply vaulted the rupee to a intra-day high of 55.60 before concluding at 55.61, a net rise of 119 paise or 2.10 per cent compared to yesterday's close of 56.80. The rupee was the best-performing currency in Asia today.

The previous two biggest single-day gains since 2003 were 124 paise rise on September 22, 2011 and before that 119 paise jump on November 12, 2008.

The rupee's gain comes after 25 per cent slide in one year , which saw it plummeting to all-time low of 57.3 last week.

Forex traders said a steep fall in the US currency overseas against the euro as well as other major rivals after European Union leaders agreed to employ measures aimed at stabilising Spanish and Italian bond markets and establish a Eurozone-wide banking union also supported rupee's gains.

The premium for the forward dollar moved down further slightly on sustained receivings by exporters.

The RBI fixed the reference rate for the US dollar at 56.3090 and for euro at 70.9080.

RBI draws up plan to usher in less-cash deals

Invites comments on ‘Payment System Vision Document 2012-15’ by July 31

The Reserve Bank of India (RBI), on Wednesday, said that it planned to enhance the availability and acceptability of alternative payment instruments in lieu of cash to move towards less-cash economy and promote ‘mobile wallets’ as a single instrument for carrying out financial transactions.

follow the link for more:

http://www.thehindu.com/business/Economy/article3577512.ece

Court: No leniency in cheque bounce case

http://www.financialexpress.com/news/no-leniency-in-cheque-bounce-cases-court/966939/0

A Delhi court has sentenced a jeweller to one year in jail in a cheque bounce case saying that convicts in such cases cannot be shown mercy as the offence is on "rise in the society".

The court also directed 57-year-old jeweller to pay a compensation of Rs 2.8 lakh to the man to whom he had issued the cheques worth Rs 1.4 lakh to repay a loan in 2007.

Metropolitan Magistrate Shefali Barnala Tandon rejected the convict's plea for leniency and release on probation saying that deterrent punishment is needed in cheque bounce cases.

"I am not inclined to grant the benefit of Probation of Offenders Act as the cases of dishonour of the cheque are on high rise in the society and the same (leniency) shall not serve as deterrence to others.

"Considering the totality of circumstances and also considering the age of the convict, he is sentenced to simple imprisonment for a period of one year and is further ordered to pay compensation to the complainant for an amount of Rs 2,80,000 under section 357(3) CrPC (regarding compensation)," the magistrate said.

The court said if convict Jagdish Kumar Bhola, owner of Jagdish Jewellers, failed to pay the compensation, he would have to undergo a further imprisonment for three months.

It, however, suspended the sentence for one month and granted him bail to enable him to file appeal against the order.

The order came on Delhi-resident P S Bhatia's complaint under the the Negotiable Instruments Act, which alleged that Bhola had taken a loan of Rs 1.4 lakh and issued cheques to repay it but the same were dishonoured by the bank with a comment "payment stopped by drawer".

Bhola denied the charges contending that he had already repaid the loan amount and had stopped the payment through cheques as they were issued only as security in lieu of loan. The court convicted him saying no document was brought on record by the accused to show the payment of loan.

Merger of Associate Banks with SBI

The Hindu

http://www.thehindu.com/business/Economy/article3572616.ece

State Bank of India (SBI) Chairman Pratip Choudhary has emphasised the need for enhancing equity and foreign investment in the country, besides taking measures for raising exports.

“There is a need for more equity investment in the country and enhancing capabilities for raising exports as at present we import more and export less,” the SBI Chairman told reporters here last evening while commenting on the measures taken by the Reserve Bank of India (RBI) to arrest the slide of the rupee.

Mr. Choudhary, who earlier addressed SBI officers at its regional headquarters, said, “These are short-term measures while the country needed steps for a long-term growth.”

Refusing to comment on the Indian economy, he said that government only could say anything about it but he insisted on raising foreign investment in the country.

Referring to the ongoing merger process of associate banks with the SBI, he said it will be done in a gradual manner, one every year and not all of them together.

The associate banks slated to be merged with SBI are State Bank of Patiala, State Bank of Hyderabad, State Bank of Mysore, State Bank of Bikaner and State Bank of Travancore.

On the issue of appointments in SBI, he said the process would be completed by Dussehra and added that this year the bank would make 9,500 clerical level appointments and appoint nearly 1,000 probationary officers.

Banks' power sector exposure might result in bad loans

Power sector woes might result in significant bad loans in the Indian banking system, whose exposure to this segment is projected to touch Rs 9 lakh crore in next three years, says a report.

Acute shortage of coal for power projects as well as worsening health of distribution companies (discoms) remain major worries for the sector.

"The government's and companies' continued inability to address the challenges in the power sector may result in significant NPLs (Non Performing Loans) in banking sector over the next 2-3 years," brokerage firm Kotak Securities has said.

In a recent report, the entity noted that new power projects having a total capacity of 40-50 GW could be in danger of defaulting on their debt obligations.

"We estimate the banking system's exposure (including loans from PFC and REC) to the power sector will rise to Rs 9 trillion (Rs 9 lakh crore) by the end of FY 2015 from Rs 5.3 trillion (Rs 5.3 lakh crore) at the end of FY 2012 (19% CAGR in FY 2012-15E)," the report noted. PFC and REC are leading state-run lenders to the power sector.

Pointing out that the central government's effort to address coal-supply and pricing challenges "is quite timid," it said that a sharp rise is expected in NPLs in power generation sector as well as increase in SEB (State Electricity Board) losses over the next 2-3 years.

Even though, the government is taking initiatives to ease fuel supply scenario for the power sector, many existing and upcoming projects are faced with severe coal shortage. Amid rising concerns about defaults in the banking system, the government is working on plans to restructure the debt burden of state discoms.

The precarious health of discoms has been mainly blamed on lower tariff realisation and efficiency issues.

http://www.moneycontrol.com/news/business/banks-power-sector-exposure-may-touch-rs-9-lakh-cr-by-fy15_722797.html

RBI announces new liberalisation measures

It has been decided to allow Indian companies in manufacturing and infrastructure sector and having foreign exchange earnings to avail of external commercial borrowing (ECB) for repayment of outstanding Rupee loans towards capital expenditure and/or fresh Rupee capital expenditure under the approval route. The overall ceiling for such ECBs would be USD 10 billion.

The existing limit for investment by Securities and Exchange Board of India (SEBI) registered foreign institutional investors (FIIs) in Government securities (G-Secs) has been enhanced by a further amount of USD 5 billion. This would take the overall limit for FII investment in G-Secs from USD 15 billion to USD 20 billion. In order to broad base the non-resident investor base for G-Secs, it has also been decided to allow long term investors like Sovereign Wealth Funds (SWFs), multilateral agencies, endowment funds, insurance funds, pension funds and foreign central banks to be registered with SEBI, to also invest in G-Secs for the entire limit of USD 20 billion. The sub-limit of USD 10 billion (existing USD 5 billion with residual maturity of 5 years and additional limit of USD 5 billion) would have the residual maturity of three years.

Mutual funds:

Qualified Foreign Investors (QFIs) can now invest in those mutual fund (MF) schemes that hold at least 25 per cent of their assets (either in debt or in equity or both) in infrastructure sector under the current USD 3 billion sub-limit for investment in mutual funds related to infrastructure.

http://www.financialexpress.com/news/boost-fii-gsec-cap-at-20bn-ecb-10bn/966509/

ATM trick: Kerala based Bank cheated of Rs 1 Crore

The Cyber Crime Cell of Mohali, in a joint operation with the Kerala Police, claims to have busted an inter-state gang, first of its kind in the country, which duped a Kerala-based bank of over Rs 1 crore, adopting a unique method of withdrawing money using ATM cards.


Follow the link below to read more about the modus operandi of the fraudsters.

http://www.financialexpress.com/news/atm-trick-bank-cheated-of-of-rs-1-cr/965272/0

Kingfisher Lenders to meet next week:

The 18-bank consortium of lenders to Kingfisher Airlines is likely to meet next week to take a call on the debt-ridden carrier's call for additional funds, so that it could standardise its debts which are now bad assets.


SBI is the leader of the lenders' consortium which has 18 banks out which 14 are state-owned. The Bangalore-based carrier, which has not been paying salaries to employees for the past four months besides defaulting on tax payments as well as bills to its vendors, has been seeking fresh bank funding since last December apart from raising overseas funds. 


Bankers have been resisting the demand saying the promoters, including Mallya, have to bring in at least Rs 2,000 crore as fresh capital to consider the demand.




http://www.financialexpress.com/news/kingfisher-lenders-to-meet-next-week-sbi/965831/

White Label ATMs

In an effort to extend the reach of banking services, the Reserve Bank of India (RBI) on Wednesday issued final guidelines to set up white label ATMs (WLAs). With a net worth of at least Rs 100 crore, any non-bank entity can set up, own and operate these ATMs to provide services to customers of Indian banks. They can use their debit card to withdraw money from these automated teller machines.

A non-bank entity, according to the guidelines, has three schemes to apply for authorization from RBI for setting up WLAs in differnt cities, towns and villages. The approval will remain valid for one year. The scheme and number of WLAs sought to be installed would need to be indicated at the time of application.

The coinage White Label ATM:

White label means, an ATM that does not have any label of any bank. Here, there are three inherent parties: the non-bank corporate entity, authorized ATM network operators/ card payment network operators like RuPay, Visa or MasterCard and a sponsor bank for cash management, funds settlement as well as customer grievance redressal.

What WLAs mean to a bank?

A bank can save huge costs on account of setting up ATMs. On an average, a bank incurs a capital expenditure of around Rs 3-4 lakh per ATM buying. Additionally, operation costs come in the range of Rs 40,000-50,000 per month per ATM depending on certain factors like rent, security and electricity. A popular perception suggests, cooperative banks and regional rural banks with no strong capital strength will be more interested to look at such ATMs.

Any big corporates (viz.Tatas, L&T and others) keen on banking services will apply. Morever, non-banking finance companies with wider reach in rural and semi urban areas are more likely to go for it.

Charges involved...

While the WLA operator (read non-bank entity) is entitled to receive a fee from the banks for the use of ATM resources by the banks' customers, WLAs are not permitted to charge bank customer directly for the use of WLAs.
A WLA operator would be permitted to display advertisements and offer value added services. However, it would not be entitled to any fee from the card issuer-bank.

moneycontrol.com

PAN not needed for people outside IT Bracket

People with income below taxable limit need not furnish Permanent Account Number(PAN), the Karnataka high court ruled. 

The High Court order came as a relief to thousands of individuals who are asked to provide PAN despite having income below the taxable limit. Section 206 AA of the Income-Tax Act, which became effective from assessment year 2010-11, makes it mandatory for every person to furnish PAN in their transactions with banks and financial institutions.

They do not have any income other than the income received from FIs and they have declared this under Form 15G. Form 15G is usually used for declaring that a person's income is below taxable limit, and therefore, the bank or FI is not required to deduct tax at source while making payments.

Under section 139A of the I-T Act, only persons whose income is chargeable to tax are required to obtain a PAN. But section 206AA compels even those without a taxable income to obtain a PAN, failing which tax will be deducted at source. The High Court observed that lack of PAN discourages the poor and the illiterate to make small investments. The HC further observed that persons whose income is below the taxable limit need not have a PAN and also they need not furnish income tax declaration/returns. The poor and illiterate would find it difficult to approach the I-T authorities, or other government authorities to get PAN, the high court observed.

http://timesofindia.indiatimes.com/business/india-business/No-PAN-needed-for-people-outside-income-tax-bracket-Karnataka-high-court/articleshow/14332444.cms

India ranks 55th of Foreign money in Swiss Banks

Indians' money in Swiss banks may have risen for the first time in five years, but they account for a meagre 0.14 per cent of total foreign wealth deposited there -- putting India at 55th place globally for such funds.

The total overseas funds in Switzerland's banking system stood at 1.53 trillion Swiss francs (about Rs 90 trillion) at the end of 2011, which included 2.18 billion Swiss francs (Rs 12,700 crore) belonging to Indian individuals and entities.

While India accounted for only 0.14 per cent of total foreign money in Swiss banks, the UK accounted for the largest share of little over 20 per cent, followed closely by the US with about 18 per cent.

As per the latest data disclosed by Swiss National Bank (SNB), Switzerland's central bank, India is now ranked 55th in terms of funds belonging to overseas clients in Swiss banks.

Among the top-ranked jurisdictions, the UK and the US were followed by West Indies, Jersey, Germany, Bahamas, Guernsey, Luxembourg, Panama and France, Hong Kong, Cayman Islands, Japan, Singapore, Australia, Italy, Netherlands, Russia, Saudi Arabia and United Arab of Emirates.

source:

http://www.moneycontrol.com/news/business/india-ranks-55thforeign-moneyswiss-banks_718893.html