Bank of Baroda scam: RBI tells banks to conduct internal audit

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All public sector and private banks have been asked by the Reserve Bank of India to conduct a “thorough internal audit” and put the report before their respective audit committees, as part of the central bank’s efforts to check fraudulent foreign exchange transactions. The move comes in the wake of irregularities that came to light last year in Rs 6,100-crore import remittances effected by Bank of Baroda’s Ashok Vihar branch in New Delhi.

A circular has been issued to all scheduled commercial banks, advising them to conduct a thorough internal audit and place the report before audit committee of the board of the respective banks and to forward the summary of findings to RBI, the central bank said in reply to an RTI query filed by PTI. The RBI was asked to provide details of action being taken by it to check fraudulent forex transactions by banks. “We are in the process of receiving the internal audit report from various banks,”it said.

The RBI has asked Bank of Baroda to conduct a bank-wide review of the outward remittances to rule out similar wrong doings at other domestic branches and submit a report thereof to it. The bank has since completed the internal audit and placed the report before its audit committee for directions. The Bank of Baroda has also selected a consultant to review its Know Your Customer (KYC), Anti-Money Laundering (AML) and Combating the Financing of Terrorism (CFT) policy and practices, to set up robust systems, the central bank said.

“They have also framed a policy for advance import remittance which covers system check points like cooling period of six months in respect of newly opened account, multiple transactions in a day for $100,000 and below, etc,” the RBI said.

Both the Central Bureau of Investigation and Enforcement Directorate (ED) are probing remittances of Rs 6,100 crore to Hong Kong from the Bank of Baroda’s Ashok Vihar branch.

The huge transaction is believed to be trade-based money laundering as the amount was transferred in the garb of payments for imports that never took place, investigators say.

Source: http://www.business-standard.com/article/pti-stories/bob-forex-scam-rbi-tells-all-banks-to-conduct-internal-audit-116013100149_1.html

Foreign firms rush to India’s online marketplace

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India’s booming online marketplace business has attracted a new wave of merchants and sellers from countries such as China, South Korea, Japan, Singapore and the US. In fact, thousands of sellers are getting into tie-ups with Indian e-commerce players to kick-start operations in the country.

 

According to industry insiders, around 50,000 sellers from China, South Korea and Singapore are planning to enter India through online marketplace players.

 

“In business-to-business (B2B) segment, there is no online organised player in the country right now. The market is being created for the online businesses,” said Sanjay Sethi, co-founder and CEO of Shopclues. The company has brought in DHgate, the second largest player in China after Alibaba, on to its platform. It’s also getting 25,000 South Korean merchants on board. Tie-ups are also in process with Singapore Traders Association to enable them to sell on Shopclues.

 

American retail major Walmart is also exploring ways to tie up with leading e-commerce companies in India, including Flipkart, Snapdeal, ShopClues, Grofers and Bigbasket. It is learnt that German wholesale giant Metro Cash and Carry is also in talks with e-commerce marketplace players to sell its products online.

 

Meanwhile, e-commerce giant Alibaba is looking to make a big bang entry into India’s marketplace via One97 Communications-owned Paytm.

 

Alibaba is expected to be the support behind Paytm’s China product portfolio. With that in place, Paytm will aim to become the biggest Indian player insofar as the number of sellers on the platform is concerned. With eight million sellers, Alibaba has the widest seller range as well as product portfolio.

 

This is not for the first time that Paytm is planning to sell Alibaba’s product range. During Diwali last year, Paytm had the whole product catalogue sourced from Alibaba and merchants from China were directly shipping products to customers in India, saving Paytm the hassle of finding warehouses.

 

As for the second top player in China, DHgate, online B2B would be a gateway into India and an opportunity to get connected to 350,000 sellers through the Shopclues portal.

 

DHgate plans to list its products across categories, including electronics, accessories, beauty products and sports. “From China we are getting around 10,000 SKUs (stock keeping units) listed. It is not a retail business and the target audience for this business are other businesses in India,” said Sethi.

 

The foreign investment rules vary across retail platforms and companies often resort to complex structuring to bypass policy. While foreign direct investment (FDI) is capped at 51 per cent in multi-brand retail with states having the last say on whether international players would be permitted to operate or not, there’s no limit of foreign investment in single-brand and business-to-business or cash and carry.

 

In e-commerce, however, FDI is not permitted. But, e-commerce players are mostly run with foreign money by operating marketplace platforms, where rules have not been framed yet.

Source: http://www.business-standard.com/article/companies/foreign-firms-rush-to-india-s-online-marketplace-116020100015_1.html

Government working on approving companies’ names in 24 hours: MCA

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The government is working on ensuring that the name of a new company is approved within 24 hours, a step towards improving ease of doing business and reducing overall transaction costs.

Corporate Affairs Secretary Tapan Ray said his Ministry is focused on reducing the problems faced by the industry and ensuring that ease of doing business becomes the “order of the day”.

“Incorporating a company is now much easier and will be made further easier as we go along the road. We are aiming to get a name (of a new company) approved within 24 hours,” Ray said.

The Corporate Affairs Ministry is fully geared up to improve ease of doing business, not only for starting a venture but also for the life cycle of companies as a whole, he noted.

Speaking at an event organised by the Institute of Cost Accountants of India (ICAI) here, Ray said speedier approval of names is itself a cost-cutting experiment because any delay adds to transaction costs.

“So ease of doing business is directly related to transaction costs. So the moment you make the ease of doing business better, transaction costs comes down and ultimately it has an affect on the product,” Ray said.

Stressing the need for becoming globally competitive, he said the dream of making India a manufacturing hub can be realised when costs are low.

“People will only start manufacturing in India if it is the cheapest,” he added.

Corporate Affairs Ministry, which is implementing the Companies Act, has been taking various steps to improve ease of doing business in the country.

Ray said setting up of the National Company Law Tribunal (NCLT) would further facilitate business in the country.

The Ministry has sought comments from stakeholders on draft rules pertaining to the proposed NCLT, which would replace the Company Law Board (CLB).

Source:
http://economictimes.indiatimes.com/articleshow/50785152.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst

India’s ranking on global corruption index improves

by | posted in: Corporate Updates, Economy, Business Updates, Corporate Affairs, India & International - Corporate updates | 0
India has showed some improvement in addressing corruption this year, ranking 85th among 175 countries as against 94th last year, graft watchdog Transparency International India (TII) said on Wednesday.
Denmark retained its position as the least corrupt country in 2014 with a score of 92 while North Korea and Somalia shared the last place, scoring just 8, it said.In India’s neighbourhood, China moved to 100th place, down from 80th last year, while Pakistan and Nepal were at 126th position. Bangladesh was 145th and Bhutan 30th in the ranking. Sri Lanka was ranked 85th with India. Afghanistan was at a bleak 172.According to the Corruption Perception Index (CPI) report by TII, “the CPI score for India increased by 2 points in 2014 from its 2013 score, helping India’s rank move up to 85 in 2014 from 94 in 2013”. India’s score stood at 38 as compared to 36 last year.

The improvement in CPI for India was driven primarily by two data sources — from the World Economic Forum and World Justice Project’s (WJP) index.

“A score increase on WEF suggested businesses in India were viewing the environment favourably with regards to their perception of corruption and bribery in the country”.

The WJP score also went up reflecting the perceptions of public sector corruption coming down slightly in India, the report said.

The report noted that in terms of the new government, the CPI possibly captured the anti-corruption mandate on which the new government was elected and the possibility of some new reforms in this area.

“However, the data used for CPI mostly was collected prior to the change of government and therefore this will not reflect directly into any of the CPI sources,” it said.

To calculate India’s position this year, 9 out of 12 independent data sources specialising in governance and business climate analysis were also used.
These included Bertelsmann Foundation, World Bank and World Economic Forum. They helped in measuring perceptions of corruption in public sector and cross country comparability.

In his reaction, chairman of TII S K Agarwal, said the “new Government has got fully majority on agenda of good governance and now it’s high time to act and pass all pending anti corruption bills including the right of citizens for time bound delivery of goods and services and Redressal of their Grievances Bill”.

Source: http://timesofindia.indiatimes.com/india/Indias-ranking-on-global-corruption-index-improves/articleshow/45358144.cms

I-T Department resolves over 100 transfer pricing cases of US companies

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Indian tax authorities have resolved more than 100 cases of transfer prices with their US counterpart, involving companies from IT and ITeS sectors, in a move expected to give a boost to investment flows into the country.

The Central Board of Direct Taxes (CBDT) has said resolution of such issues follows the framework agreement signed with the US revenue authorities in January last year as part of the Mutual Agreement Procedure (MAP).

The framework will cover about 200 transfer pricing disputes involving US companies.

“More than 100 cases have already been resolved and some more are expected to be resolved before the end of this fiscal,” the CBDT said in a statement on Thursday.

The agreement with the US was finalised under the MAP provision in the India-USA Double Taxation Avoidance Convention.

It further said MAP programmes with other countries such as Japan and the UK are progressing well with regular meetings and resolution of past issues.

The CBDT said a combination of a robust advance pricing agreement (APA) programme and a streamlined MAP would be helpful in creating “an environment of tax certainty and encourage MNCs to do business in India”.

Earlier, the US bilateral APA programme was not applicable to India. “The success of the framework agreement in a short period of one year has led to US revenue authorities opening up their bilateral APA programme to India. The US is expected to begin accepting bilateral APA applications shortly,” the CBDT said.

APA, which was introduced in the Income Tax Act in 2012, provides for signing of an agreement between a taxpayer and the Income Tax department on an appropriate transfer pricing methodology for determining the value of assets and ensuing taxes on intra-group overseas transactions.

Source:
http://economictimes.indiatimes.com/articleshow/50765124.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst

Foreign investment quality improves substantially with PM Narendra Modi’s Make in India push

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The quality of foreign investment coming into the country has improved substantially, according to Reserve Bank of India data.

Much of this is foreign direct investment (FDI) materialised in the September 2014-November 2015 period after Prime Minister Narendra Modi launched the Make in India campaign and bettered portfolio inflows during the period.

Gross FDI inflows amounted to $62.6 billion, 31% higher than $47.6 billion in the preceding 15 months.

This is more than triple the amount of net portfolio inflows of $14.3 billion in the same period. An analysis of the monthly trend in foreign investment inflows shows that in most months stable long-term FDI has been more than portfolio inflows, which have been more volatile in the period.

Economists say the surge in FDI is largely due to several initiatives by the government to attract investment in the manufacturing sector. “FDI and portfolio flows over the past year-and-a-half suggest that conscious efforts of the government to encourage more stable direct investments are yielding results,” said Saugata Bhattacharya, chief economist at Axis Bank. “At a time when global capital markets have become volatile, FDI flows reduce uncertainty about foreign capital outflows and, consequently, currency volatility.”

The surge in FDI in India is significant given that investment across the world has fallen by 16%, said Amitabh Kant, secretary at the Department of Industrial Policy and Promotion, at a recent event.

Though a sizeable amount is estimated to have gone to the manufacturing sector, including consumer goods and food processing, among others, a section of the market feels that a portion of the FDI inflows could have come through the private equity route.

This seldom finds its way into greenfield projects but at the same time provide an important source of finance for entrepreneurs.

“A significant part of the higher FDI has come in as PE and VC funding, which helps finance entrepreneurs,” said Bhattacharya.

Prime Minister Modi’s Make in India initiative is aimed at turning the country into a global manufacturing hub to generate jobs, raise incomes and drive growth.

The government has been seeking to drum up investment as part of this effort. India’s growth is being driven by public spending and consumption with private investment yet to kick in substantially.

Source:  http://economictimes.indiatimes.com/articleshow/50764021.cms

India less vulnerable to external shocks: S&P

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Indian economy is less vulnerable to external shocks as it is mainly driven by household consumption and government spending, and not dependent on hot money which can move out quickly, Standard & Poor’s Rating Services said today.

The US-based rating agency expects the current account deficit (CAD), which is the difference between inflow and outflow of foreign exchange, to remain at a modest level of 1.4 per cent at the end of current fiscal and would continue at similar level till 2018.

“We see India as having limited vulnerability to external economic or financial shocks. This is because growth in the economy is mainly driven by domestic factors, such as household consumption and government spending.

“At the same time this is a country that has low reliance on external savings to fund its growth. In other words, the banks are mainly deposit funded and don’t rely on wholesale funding to grow their loan books,” S&P Rating Services India Sovereign Analyst Kyran Curry told PTI.

He said India’s capital markets are diversified and deep enough for companies to raise funding.

“Another favourable aspect of India external settings is that it is generally not subject to hot money inflows that can turn into outflows with shifts in investor sentiment. As such we see the external risks for India to be relatively contained,” Curry said.

He said while export growth may be disappointing, the current account deficit likely to be a modest 1.4 per cent in 2015, with similar levels through 2018.

“Our forecasts are partly informed by our view of increased monetary credibility, which dampens the demand for monetary gold imports. In addition, we expect India to fund this deficit mostly with non-debt, creating inflows,” Curry added.

The CAD in the first half of current fiscal stood at 1.4 per cent of GDP, lower than 1.8 per cent in the same period last fiscal. For full 2014-15 fiscal, the CAD stood at 1.3 per cent of GDP.

Source: http://economictimes.indiatimes.com/articleshow/50727133.cms