Economy News-Daily Digest: 11 Key Updates

1. Govt, RBI plan to initiate criminal action against large wilful defaulters

The government, along with the Reserve Bank of India (RBI), is mulling a multi-pronged strategy-initiating criminal action against wilful, big defaulters and a one-time settlement for certain sectors- to tackle the mess of toxic debts in public sector banks. The strategy will also involve encouraging banks to take a haircut, setting up more oversight panels and reworking the Joint Lenders’ Forum (JLF).

2. SEBI seeks easing of Budget’s STT proposal

The Securities and Exchange Board of India (SEBI) has sent a list of market scenarios that can be kept out of the Union Budget’s proposal of levying capital gains tax on transactions of shares that were acquired by not paying the Securities Transaction Tax (STT). The market regulator has recommended to the finance ministry that transfer of shares on account of inheritance, restructuring within companies and Employee Stock Options (ESOPs) can be part of the exempt list.

3. Govt may shuffle heads of some PSU banks, including IDBI banks

The government is considering a proposal to shuffle the heads of some public sector lenders, including IDBI Bank, to improve their performance and resolve the issue of bad loans. The Appointments Committee of the Union Cabinet will take a final decision on this issue. IDBI Bank has largest presence in joint lending and a has critical role in many Corporate Debt Restructuring (CDR) proposals.

4. SBI may introduce variable pay structure

State Bank of India (SBI) might revive an old salary structure proposal that the bank always wanted to implement but could not because of union pressure. The structure entails that the salaries of officers in scale four to seven be divided into fixed and variable components. Fixed will club basic, dearness allowance, house rent allowance and the rest would be performance-linked variable. The new structure, if adopted, would be applicable for the employees of associate banks, too, once they become part of SBI after April 1.

5. Kotak Mahindra Bank seeks nod to raise foreign investment limit

Kotak Mahindra Bank will seek shareholders’ approval to raise foreign investment limit to up to 49% from existing 42%. The board of directors granted consent to seek approval of shareholders to increase ceiling on total shareholding of Foreign Institutional Investors (FIIs)/Foreign Portfolio Investors (FPIs) to up to 49%.

6. Indian banking sector’s stressed loans increase to $147.33 billion

Indian banks had stressed loans of Rs 9.64 lakh crore ($147.33 billion) as of end-December. As of end-September, the banks’ total stressed loans were Rs 8.97 lakh crore, according to data from the Reserve Bank of India. Stressed loans include bad loans and restructured or rolled over loans.

7. Bankruptcy Code to take precedence over GST claims

The revised model Goods and Services Tax (GST) law has proposed that tax arrears cannot be the first charge for a bankrupt company. Instead, the provisions of the Insolvency and Bankruptcy Code, 2016 will take precedence over other Central and State laws. The changes have been incorporated in the finalised drafts of CGST, SGST, IGST and UTGST Bills that were formally cleared by the GST Council. The provision was earlier not included in the draft Bills.

8. Deal4Loans re-branded as Wishfin

Financial marketplace Deal4Loans has a new corporate identity, Wishfin. The re-branding also heralds the expansion of the company’s focus to other financial products, such as mutual funds, savings products and insurance.

9. ESAF Small Finance Bank kicks off operations

The newly-launched ESAF Small Finance Bank will offer interest rates between 5.75 and 9% for term deposits of varying maturities. For savings deposits, the rates will vary from 6 to 7%, based on the outstanding balance in the account. Senior citizens will be entitled to an additional 0.05% for term deposits. Promoted by ESAF Microfinance and Investments, the bank proposes to open 85 branches in the first year.

10. Non-life, health insurance: Norms eased for recruiting PoS persons

The Insurance Regulatory and Development Authority of India (IRDAI) has eased norms for recruitment of Point-of-Sales (PoS) persons by non-life and health insurers. With effect from April 1, insurers/ intermediaries will be allowed to appoint PoS persons with the mandatory training and passing of NIELIT examination, which is already being allowed in the case of life insurance. The insurers, however, should ensure that the applicant for PoS position is not engaged with any other insurer or insurance intermediary by cross-checking with the database of the Insurance Information Bureau. They should also conduct an in-house training of 15 hours for the candidate which would be followed by an exam. Successful candidates should be engaged as PoS persons by entering into a written agreement, which would specify the terms and conditions.

11. Essar township in Surat goes cashless

The Essar group’s township at Hazira in Surat district of Gujarat has become India’s first private sector township to go cashless. The residents of Nand Niketan township have been provided with The Mobile Wallet (TMW) that has seen more than 12,000 app downloads since the launch recently. Over 8,000 TMW-RBL Bank prepaid cards have been issued to the residents.

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