Foreign capital flow into EMs climbs to $25 billion

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Emerging markets (EMs) have witnessed an inflow of $25 billion from foreign portfolio investors in this month so far, says a report.

Equity flows were the dominant driver this month, with an estimated $14.6 billion in inflows, while debt flows were more moderate at $10.2 billion, according to the report by the Institute of International Finance.
Inflows were dominated by EM Asia, followed by Latin America, while EM Europe and Africa, West Asia saw modest outflows.

“Regionally, EM Asia saw total inflows of $19.1 billion, followed by Latin America with inflows of $8.7 billion, while there were modest outflows from EM Europe and AFME,” the report noted.

Portfolio flows to EMs rose to $24.8 billion in July from $13.3 billion in the preceding month. Prior to that, EMs saw an outflow of $12.3 billion in May.

“In fact, July marked only the second month over the past year where portfolio flows were above their long-term average of $22 billion,” it added.

The recovery in flows during the past few months follows a period of exceptional weakness in EM portfolio flows that began with China’s mini-devaluation almost a year ago and saw cumulative outflows of $81 billion from EMs, compared to $96 billion during the global financial crisis.

Source: http://www.business-standard.com/article/markets/foreign-capital-flow-into-ems-climbs-to-25-billion-116072800946_1.html

Extension of Due Date – Filing of Income Tax Return for Assessment Year 2016-17

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Income tax department has issued order that due date of filing of returns of income for the Assessment Year 2016-17 has been extended from July 31, 2016 to August 5, 2016, for those assessees, whose due date was originally 31 July 2016.

 

The relevant circular issued by CBDT in this regard is available at http://incometaxindia.gov.in/Lists/Latest%20News/Attachments/54/order-extension-india-2016.pdf  for ready reference.

 

Please visit http://incometaxindiaefiling.gov.in/ for filing your ITR.

 

Tax return filing is mandatory for Individuals whose income is above the taxable limit.

 

As per CBDT Notification number 225/195/2016 dated 29.07.2016, due date is extended from 31.07.2016 to 05.08.2016 in case of tax payers, not liable for audit, as per the revised due date  August 5, 2016.

 

Cairn India to invest in existing projects

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Cairn India, the petroleum exploration arm of London-listed Vedanta Resources, plans to continue investing in its existing projects to enhance domestic hydrocarbon production despite tough operating conditions and uncertain economic environment mainly because of strong demand outlook for the commodities.

Based on the International Energy Agency’s World Energy Outlook, by the year 2040, 91% of India’s demand for oil and 49% demand for gas would be met by imports. This high dependence would entail significant cost to the economy, it said.

“We will continue to invest in our existing assets to increase production and maximize economic recovery. I remain confident that your company will play a pivotal role in India’s quest for energy security,” said Cairn India’s FY16 annual report quoting chairman Navin Agarwal.

The key enablers for Cairn India’s growth would be strength in ‘execution’, technology along with a strong balance sheet, he added.

Cairn India’s Rajasthan block has significant national importance as it has considerably helped reduce country’s crude oil imports.

The company operates over 27% of domestic crude oil production. During the year, Cairn India’s operations helped reduce India’s import bill by over Rs 21,000 crore and its gross contribution to the government exchequer was over Rs 10,000 crore.

Cairn India’s success, over the years, has been reinforced by innovative application of technology. This has enabled early adoption of technology including enhanced oil recovery in the Rajasthan field.

One of the world’s largest polymer flood projects at Mangala, continued to yield positive results and contributed an average of 14,000 barrels of oil equivalent per day, during FY2016, said the report.

During the year, amid low oil price environment, Cairn India has focussed on optimising costs, building talent and capabilities from within, and keeping employees focussed on goals and priorities of the organisation, said the report. This enabled the company to generate free cash flow over $637 million, it said.

Despite steep drop in crude oil prices, Cairn India adhered to its stated dividend policy with a pay-out amounts to 31.6% of the company’s annual consolidated normalized net profit, informed Agarwal.

Regarding merger of the oil company with Vedanta, Agarwal said Cairn India continues to work towards completion of merger which would generate value for the shareholders and de-risk the company. Upon the merger, Cairn India will get access to Vedanta’s tier-one metal and mining assets, which are well-invested, low cost and have a long life.

On Thursday, Cairn India reported a 28 per cent fall in its June quarter net profit at Rs 360 crore against Rs 501 crore in the corresponding period a year earlier. Revenues dipped to Rs 1,885 crore from Rs 2,627 crore due to slump in crude oil prices.

Source: http://www.business-standard.com/article/companies/cairn-india-to-invest-in-existing-projects-116072100828_1.html

India central bank relaxes rule for Basel III liquidity coverage ratio

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The Reserve Bank of India relaxed Basel III-mandated liquidity coverage ratios for banks, allowing the sector to apply an additional one percentage point of the deposits they currently hold as government bonds under their statutory liquidity ratios (SLR).

Banks can now apply up to 11 percent of their deposit base held as SLR – or government securities that banks must hold with the RBI – from 10 percent earlier when calculating their liquidity coverage ratios to meet Basel III requirements, the RBI said in a statement on Thursday.

Liquidity coverage ratio is a capital measure mandated under Basel III norms requiring banks to maintain highly-liquid assets, including government securities, to meet any sudden short-term outflows.

 

RBI/2016-17/25
DBR.BP.BC.No.2/21.04.098/2016-17

July 21, 2016

All Scheduled Commercial Banks
(excluding RRBs)

Dear Sir,

Basel III Framework on Liquidity Standards – Liquidity Coverage Ratio (LCR), Liquidity Risk Monitoring Tools and LCR Disclosure Standards

Please refer to our circulars DBOD.BP.BC.No.120/21.04.098/2013-14 dated June 9, 2014, DBR.BP.BC.No.52/21.04.098/2014-15 dated November 28, 2014 and DBR.BP.BC.No.77/21.04.098/2015-16 dated February 11, 2016 on ‘Basel III Framework on Liquidity Standards – Liquidity Coverage Ratio (LCR), Liquidity Risk Monitoring Tools and LCR Disclosure Standards’.

2. Presently, the assets allowed as the Level 1 High Quality Liquid Assets (HQLAs) for the purpose of computing the LCR of banks, inter alia, include Government securities in excess of the minimum SLR requirement and, within the mandatory SLR requirement, Government securities to the extent allowed by RBI under Marginal Standing Facility (MSF) [presently 2 per cent of the bank’s NDTL] and under Facility to Avail Liquidity for Liquidity Coverage Ratio (FALLCR) [presently 8 per cent of the bank’s NDTL].

3. It has been decided that, in addition to the above-mentioned assets, banks will be permitted to reckon government securities held by them up to another 1 per cent of their NDTL under FALLCR within the mandatory SLR requirement as level 1 HQLA for the purpose of computing their LCR. Hence, the total carve-out from SLR available to banks would be 11 per cent of their NDTL. For this purpose, banks should continue to value such reckoned government securities within the mandatory SLR requirement at an amount no greater than their current market value (irrespective of the category of holding the security, i.e., HTM, AFS or HFT).

Yours faithfully,

(Ajay Kumar Choudhary)
Chief General Manager

Source: http://www.reuters.com/article/india-cenbank-lcr

CBDT to issue refunds less than Rs. 5,000 by month-end

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In a bid to spruce up its tax-payer-friendly image, the Central Board of Direct Taxes has asked its officers to ensure that refunds less than Rs. 5,000 are issued by the month-end.

“It has been decided that refunds up to Rs. 5,000, as also refunds in cases where arrear demand is up to Rs. 5,000 in non-computer aided scrutiny selection (CASS) cases, may be issued expeditiously without any adjustment of outstanding demand,” it said in a recent directive to field formations, asking them to complete the exercise by July 29.

Sources said the CBDT wants to ensure that all refund backlogs from previous years for small amounts should be fully cleared this fiscal. “With more returns being filed online and processed electronically, the department wants to ensure that refunds are also given out on time,” said an official.

The CBDT directive also noted there is a large pendency of refunds of small amounts relating to non-CASS cases that are pending for the assessment years 2013-14, 2014-15 and 2015-16.

The CBDT has also called for “expeditious” clearing of refunds where notices were issued for adjustment but there was no response from the tax payer. “Such cases be treated as though the taxpayer had “no-objection”…,” it said. The reminder to field offices comes at a time when the CBDT is trying to clear a backlog in processing of refunds as well as income tax returns. In 2015-16, the CBDT had issued 1.61 crore refunds worth Rs. 1.71 lakh crore.

Finance Minister Arun Jaitley too has stressed on the need for faster refunds to ensure that taxpayers are not put to inconvenience.

 

Source: http://www.thehindubusinessline.com/todays-paper/tp-news/cbdt-to-issue-refunds-less-than-rs-5000-by-monthend/article8883185.ece

IPOs of start-ups in India: Retail investors participation may get cleared

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Retail investors might soon be allowed to participate in the initial public offerings (IPOs) of start-ups with the Securities and Exchange Board of India (Sebi) planning to scrap the Institutional Trading Platform (ITP) for these firms. The move comes after the platform failed to witness a single listing since it was launched last year.

Sources privy to the development said instead of providing an exclusive platform for start-ups, Sebi is now planning to allow start-ups to list on the regular platform. However, some relaxations would be provided  in terms of disclosures and compliance norms. Sebi is planning to amend both the Issue of Capital and Disclosure Requirements (ICDR) and Listing Obligations and Requirements (LODR) regulations, accordingly.

As per the regulations relating to Capital Raising and Listing on Institutional Trading Platform regulations for start- ups, only institutional investors and high-net worth individuals (HNIs) are allowed to trade on ITP and the minimum ticket size was `10 lakh. Retail investors were not allowed to invest in such issues as the markets regulator felt small investors should be safeguarded against a higher level of risks associated with the platform.

Several start-ups have expressed concerns about the liquidity on ITP. Further, not even a single company has filed for an IPO on the special platform till date. Hence, Sebi wanted to review the regulations and address the concerns raised by the start-ups,” said a member of Sebi Primary Markets Advisory Committee (PMAC).

Allowing start-ups to list on the regular platform would also address the concerns regarding the minimum institutional ownership clause in the regulations. As per the current regulations, to be eligible to raise funds via an IPO, 50% of the pre-issue capital of the company must be held by qualified institutional buyers (QIBs). In the case of e-commerce and technology start-ups, 25% of the pre-issue capital should be owned by institutional investors.

In August 2015, the regulator had announced a new set of listing regulations for start-ups operating in the e-commerce space in sectors such as information technology (IT), data analytics and biotechnology.The regulations provided several relaxations to start-ups keeping in mind the unique nature of the industry including removal of caps on the money spent by start-ups on publicity and advertisements as they need to spend much more for such purposes.

Infibeam, an e-commerce company that went for an IPO in the current calendar year, chose to list on the main board instead of the ITP. Although the company filed its draft prospectus with the regulator before the ITP was announced, the company had a choice to migrate, subsequently. According to investment bankers, the company didn’t choose ITP because of concerns about the platform.

 

Source:http://www.financialexpress.com/markets/indian-markets/ipos-of-start-ups-in-india-retail-investors-participation-may-get-cleared/323787/

Bandhan Bank reduces microfinance loan rate

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Bandhan Bank on Monday reduced its lending rate for micro loans by 0.6 per cent, bringing down the interest to 19.9 from 20.5 per cent.

This is the third time the bank has reduced its interest rate for such consumers. Immediately after the microfinance institution transformed itself into a bank last August, it had slashed the rate by 1.4 percentage points or 140 basis points (bps), effectively reducing the rate to 21 per cent. In April this year, the rate was reduced by another 0.5 per cent or 50 bps for micro-small-scale sectors, making it 20.5 per cent.

With the latest round of lending rate reduction, Bandhan Bank has pared is micro loan rate by 2.5 percentage points or 250 bps in three stages in less than 11 months since it started operations as a universal bank.

Chandra Shekhar Ghosh, the bank’s chairman and managing director, said: “With the transformation of the micro-lending institution into a bank, the cost of funds has come down so we can afford to lower the interest rates. This reduction will benefit the micro-small scale industry who finds it tough to arrange for their funds.”

Since its launch, the bank has mobilised close to Rs 15,000 crore of deposits.

According to Ghosh, this will not only help attract more people opting for loans, but it will ease their financial burden as well. The cost impact on the bank is stated to be favourable with this decision.

Micro loans are generally granted for 1-2 years.

Currently, Bandhan Bank operates across 29 states and Union Territories through a network of 688 branches, 2,022 doorstep service centres and 237 ATMs with more than 8.77 million customers being served by a team of 21,000 employees. The Kolkata-headquartered bank’s savings bank account interest rate is six per cent for balances above Rs 1 lakh and 4.25 per cent for balances up to Rs 1 lakh. For term deposits, the maximum interest rate offered is 8.25 per cent for one to three years, with an additional 0.5 per cent for senior citizens.

Source: http://www.business-standard.com/article/finance/bandhan-bank-reduces-microfinance-loan-rate-116071800513_1.html