India, US to expand economic cooperation, break down trade barriers

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India and the US today vowed to expand economic relation between the two nations and explore new opportunities to break down barriers to facilitate movement of goods and services.

The leaders of the two countries resolved to pursue US- India Totalisation Agreement and enhance engagement on intellectual property rights with a view to promote innovation and creativity.

“In order to substantially increase bilateral trade, they (leaders) pledged to explore new opportunities to break down barriers to the movement of goods and services, and support deeper integration into global supply chains, thereby creating jobs and generating prosperity in both economies,” said the joint statement issued after a meeting between Indian Prime Minister Narendra Modi and US President Barack Obama.

They look forward to the second annual Strategic and Commercial Dialogue in India later this year to identify concrete steps in this regard, it added.

Highlighting the strong and expanding economic relations between the US and India, the leaders committed to support sustainable, inclusive, and robust economic growth, and common efforts to stimulate consumer demand, job creation, skill development and innovation.

It was decided to continue discussion later this year on the US-India Totalisation Agreement.

The ‘Totalisation Agreement’ seeks to do away with double taxation of income with respect to social security taxes.

Under this agreement, professionals of both the countries would be exempted from social security taxes when they go to work for a short period in the other country.

The two leaders also committed to make concrete progress on IPR issues by working to enhance bilateral cooperation among the drivers of innovation and creativity.

They also commended the increased engagement on trade and investment issues under the Trade Policy Forum (TPF) and encouraged substantive results for the next TPF later this year.

The leaders also welcomed the engagement of the US’ private sector companies in India’s Smart City programme.

The leaders resolved to facilitate greater movement of professionals, investors and business travellers, students, and exchange visitors between their countries to enhance people-to-people contact as well as their economic and technological partnership.

On the MoU for Development of an International Expedited Traveller Initiative (also known as Global Entry Programme) the statement said efforts will be made for entry of India into the said programme within three months.

 

Source: http://www.ptinews.com/news/7531712_India–US-to-expand-economic-cooperation–break-down-trade-barriers-.html

Japan banks enter ranks of biggest energy lenders

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JapanJapanese banks, known for the risk-aversion that spared them the worst of the credit crisis, have quietly grown into some of the world’s largest energy lenders.

Mitsubishi UFJ Financial Group Inc (MUFG), Japan’s largest bank, disclosed last month it has become one of the biggest oil and gas lenders with 9.2 trillion yen, or about $85 billion, in exposure – $45 billion more than it had reported at the end of the year. Sumitomo Mitsui Financial Group Inc is not far behind with about $77 billion and Mizuho Financial Group Inc has about $48 billion, calculations based on the companies’ websites show.

The megabanks sought profits in the oil patch during the boom as Japan’s shrinking population and years of economic stagnation sapped the profitability of domestic lending. While energy is only a fraction of their business, souring loans have been a drag on earnings. MUFG sees full-year profit falling 11 per cent as negative interest rates squeeze loan profitability and bad-loan costs increase.

“Japanese banks were thought to have no exposure at all and all of a sudden they’re some of the most exposed companies around the world,” said Nicholas Smith, a strategist at brokerage CLSA Ltd in Tokyo who has covered Japanese equities for over 25 years. “Perhaps we shouldn’t be surprised, given their scramble to get overseas exposure.”

The longer oil remains around $50 a barrel, the worse it gets. MUFG and Sumitomo Mitsui reported in May that the cost of bad energy loans rose in the past 12 months to a combined $994 million. Sumitomo Mitsui said that number could rise in the next year. Mizuho didn’t disclose energy-related credit costs.

Brent gained 14 cents, or 0.3 per cent, to $52.65 a barrel on the London-based ICE Futures Europe exchange at 12:28 pm Singapore time.

“Considering that we have downgraded more than 100 rated energy companies globally since December 2015, the banks’ energy and resource-related exposures in this uncertain environment could create losses that would reduce their capital,” Raymond Spencer, an analyst for Moody’s Investors Service in Tokyo, wrote in a May 19 note.

With defaults on the rise, bank investors around the world have been demanding more information about energy lending. MUFG’s exposure jumped after the bank expanded its most recent disclosure to include refineries and pipelines, borrowers that were left out of previous reports.

“I don’t believe that proactively lending to the natural resource and energy sector is in itself a mistake,” said Nobuyuki Hirano, president of MUFG, at a May 16 briefing discussing the company’s financial results. He said the company has prepared “appropriately” for potential losses. One concern for Japanese lenders is the deteriorating finances of the US shale industry. During the boom, drillers that outspent cash flow even when oil was $100 a barrel tapped credit from Japanese banks that were pushing to expand overseas lending.

Then prices plummeted below $30. Since the start of 2015, 142 oilfield service companies and oil and gas producers have gone bankrupt, owing almost $62 billion, according to law firm Haynes & Boone.

Sumitomo Mitsui is among the lenders to Stone Energy Corp., which is in restructuring talks. MUFG and Mizuho are among Linn Energy LLC,’s creditors, company records show. Linn owed $2.55 billion on two credit lines when it filed for bankruptcy May 11. Mizuho was also a lender to Breitburn Energy Partners LP, which owed $1.2 billion on its credit line when it filed for bankruptcy May 15.

While these credit lines are split up among a dozen or more lenders, and collateral in the form of oil and gas reserves may mitigate any losses, the risk is adding up. MUFG said in April that its North American subsidiary has made $5.52 billion in loans to exploration and production companies. Almost half of those loans are now marked as “criticised,” a regulatory designation that means that, at best, the loans exhibit potential weaknesses and at worst will result in losses.

The size of Sumitomo Mitsui’s total oil and gas-related exposure to non-Japanese borrowers, which is the area most vulnerable to changes in oil prices, is 6 per cent of its total portfolio, Koichi Miyata, president of the group holding company, said at a results briefing in Tokyo on May 13. “And this is a diverse mix including oil majors, 85 per cent of which I think is fair to say is extremely good credit,” he said.

Mizuho said its bad debts in the energy and resource sector totalled about $279 million as of March. “Even based on oil prices at the moment, we’re absolutely not seeing the recording of any major concentration of credit costs,” Mizuho’s President Yasuhiro Sato said at a May 13 briefing on the bank’s financial results.

“I don’t think we need to be worried at the current point in time,” said Nana Otsuki, chief analyst at Monex Group Inc, a Tokyo-based online securities firm. “But we’ll need to watch risks more carefully next year, particularly if there are any movements in the price of oil.”

 

Source: http://www.business-standard.com/article/international/japan-banks-enter-ranks-of-biggest-energy-lenders-116060901307_1.html

After Italy & Greece, PE seeks to partner Indian lenders for bad loan portfolio

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Storied asset manager KKR & Co has approached lenders like State Bank of India and ICICI Bank with a proposal to manage and create value from their loan portfolios to under-performing Indian companies. The American private equity investor will build a platform to deploy fairly long-term capital and operational expertise to turnaround troubled assets, with banks on board sharing the future upsides.

 

The proposal – discussed with a few public and private sector banks – is modelled on Pillarstone, a similar European platform created by KKR for stressed loans in markets like Greece and Italy . India’s central bank governor Raghuram Rajan has pushed lenders to purge bad loans and has urged global alternate asset managers to play a bigger role in easing India Inc’s bad loan crisis. But most Indian banks have opted for ‘fire sale’ of stressed assets to rival corporate houses rather than staying on course with a turnaround plan, though it would help these lenders unlock better value eventually.

“They are talking about jointly managing a portfolio of loans to these stressed companies as against acquiring a one-off asset. It involves sweating underlying assets to generate more value rather than writing down. This is also different than the prevailing approach by the under-capitalized asset reconstruction companies, which is more focused on asset-stripping,” said a source directly familiar with the matter. The discussions are ongoing but may not lead to any conclusive agreement with KKR, a second source cautioned.

When contacted, KKR declined to comment on the story. SBI and ICICI Bank too offered no comments. Traditionally, India’s public sector banks have stayed away from dealing with foreign investors in the stressed loan market.

Bulge-bracket global funds such as KKR, Brookfield Asset Management and Apollo Global management have looked at opportunities to acquire stressed assets put on the block by lenders. KKR was in contention to acquire Jaypee’s cement units, which was clinched by Aditya Birla-led UltraTech Cements for Rs 16,000 crore, mostly through a refinancing deal. KKR’s offer centred around acquiring 51% ownership (leaving the rest with lenders) and turning around operations under a new management team. The lenders would recoup a part of the loan upfront, while waiting for future upsides riding on a business rejig. The banks preferred a one-time deal offered by Birla’s UltraTech.

Brookfield’s acquisition of debt-laden Gammon’s road and power assets is one of the few recent instances where a global investor acquired assets of a stressed entity. “Indian lenders have opted for selling assets in distress rather than exploring ways to shore up value on troubled loans. Yesterday’s lenders have become today’s collectors. Hopefully, there will be a time when bankers will behave like bankers,” Anil Singhvi, a shareholder activist and co-founder of proxy advisory firm Institutional Investor Advisory Services (IIAS), said.

Last year, KKR along with Italian lenders UniCredit and Intesa Sanpaolo launched Pillarstone as a platform to help big corporate borrowers recover and grow. It later signed up with lenders such as Alpha Bank and Eurobank to expand the platform into Greece. Both Italian and Greek lenders have agreed to pool in about EUR 1 billion of loans each as part of the engagement with Pillarstone. KKR has said European Bank for Reconstruction and Development is also considering co-investing in the platform, which is planning to start operations into other European markets.

KKR has argued that Pillarstone is a “timely intervention” in European markets where hefty bad loans are hampering a broader economic recovery, a concern shared by policymakers in India as well. In recent weeks, the top 20 public sector banks have reported a cumulative loss of almost Rs 15,000 crore in the fourth quarter of the last fiscal. This was triggered by an unprecedented surge in provisioning for bad loans following the RBI’s asset quality review. The non-performing assets on their balance sheets is estimated at Rs 3 lakh crore.

“Nearly 15% of system assets are stressed and even if we optimistically assume that only a third of these stressed assets are going to be ultimately written off, that still means that nearly 30% the shareholders’ equity in the banking system is currently at serious risk,” Saurabh Mukherjea of Ambit Capital said in his latest research report. “The problem-facing public sector banks is more serious as 17% of their assets are stressed. It would imply that nearly 50% of the shareholders’ equity of PSBs will be written off by the end of FY18, requiring $30 billion (equivalent to nearly 1.5% of our GDP) in equity infusion. It is unlikely the government will find resources to recapitalize these ailing public sector banks,” Mukherjea added.

Source:http://economictimes.indiatimes.com/articleshow/52634610.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst

 

As income-tax returns filing date nears, 7 documents to be kept ready

by | posted in: Corporate Updates, Income Tax,e-Filing- Individuals, Firms, Companies | 0

The income-tax returns filing season is fast approaching with the initial deadline being July 31. 

The income-tax returns filing season is fast approaching with the initial deadline being July 31. You must be among those preparing to file your returns. But most tax assessees who are required to e-file their returns keep deferring till the last moment.

 

However, even if you are procrastinating, you need to be prepared with all the details that you need to provide in your tax returns. And for that you need a lot of documents to be with you. It may not easy to source these documents at the last moment since some have to obtained from your office, some come by mail and others need to be downloaded. And even if you have all of documents with you, you need to have them filed in a file that is easy to locate.

 

So what are these documents that you need to keep handy at the time of filing? FeMoney asked tax expert Sudhir Kaushik, Co-founder and CFO, Taxspanner.com on documents that are a must in hand. “Keeping documents like Form 16, Form 26AS and home or education loan certificates for obtaining deductions would ensure that your tax filing is hassle-free and complete,” Kaushik said.

 

Here are a list of documents that Kaushik says one should be ready with while filing tax returns:

 

Form-16 and Form-16A

Form-16 is the most basic source of information about the income earned and the tax deducted from your salary during the year. In case you have worked for more than one employer during the financial year 2015-16 then you must collect your Form 16 from all of them. Form 16-A form is also called a Tax Deducted at Source (TDS) certificate and is issued by banks for interest income, capital gains of NRIs, etc. If you have rental income and your landlord has deducted TDS on rent then you should collect Form-16A from the landlord too. Similarly, if you have any commission or professional income, TDS certificate for the same should also be collected.

 

Form-26AS

Your income from all sources, tax deductions and any high-value transaction(s) are reported in this form. I-T department sends notices if the ITR filed by the taxpayer does not match with the information available in Form-26AS. You should get your Form 26AS and match details with your ITR before filing it. If there is some mismatch, you should fix those errors and then file your return. You can download Form-26AS from your net banking account, directly from income-tax department’s website.

 

Bank statements from all bank accounts

You should verify that all the bank transactions carried out during the financial year with respect to income earned, investments made, expenses etc. have been declared in the appropriate sections of your return. This would show dividend income or gifts received above Rs 50,000 on which tax needs to be paid.

 

Home/education loan interest certificates

If you have taken any home/education loan then collect their interest certificate from the lender to claim the right deduction.

 

Investment proofs not submitted to employer

It is possible that some of the investments made by you during the financial year have not been included in the Form-16 issued to you. For example, if you invested in tax-saving tools such as life insurance, Public Provident Fund after proof submission deadline set by your employer, proofs of these investments would not have been submitted to your employer. For such investments, you need to have the proofs for reference while preparing your return.

 

Share/mutual fund transaction statements

These are required to enter details like sale date, purchase date, quantity and amount for computing capital gains/loss.

 

Tax payment challan(s)

If you have paid advance tax and/or self assessment tax then you need to enter the details of the same in your return for accurate computation of tax liability.

Source: http://www.financialexpress.com/article/personal-finance/income-tax-returns-filing-date-july-31-nears-7-documents-to-be-kept-ready/277141/

SEBI to make it easier for fund managers to move to India

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To make it easier for the foreign fund managers keen to relocate to India, markets regulator SEBI is considering allowing them to function as ‘Portfolio Managers’ under an easier regulatory regime.

The move assumes significance in the wake of the government already having announced taxation incentives for the offshore fund managers willing to relocate to India.

A new section in the Income Tax Act provides that the fund management activity carried out through an Eligible Fund Manager (EFM) located in India and acting on behalf of an Eligible Investment Fund (EIF) would not constitute business connection in India of such a fund.

Following the issuance of notification by the tax department in this regard, SEBI held meetings with various stakeholders to discuss the registration framework for EFMs, during which several impediments were pointed out in the existing regulations for Investment Advisers and Portfolio Managers.

Subsequently, SEBI has decided to initiate a consultation process for changes to its norms for Portfolio Managers while putting in place a framework for allowing EFMs to act as Portfolio Managers to their EIFs.

A proposal in this regard would be put up for approval of SEBI’s board next week, a senior official said.

Among the proposed measures, an existing SEBI-registered Portfolio Manager will also be allowed to act as EFM with prior intimation from SEBI and subject to certain conditions.

SEBI also plans to put in place a procedure for registration of an existing foreign-based fund manager desirous of relocating to India, or as a fresh applicant.

Such applicants will be granted registration as Portfolio Managers to act as an EFM, provided they meet existing eligibility norms of being a body corporate, having net worth of Rs 2 crore, appointment of a Principal Officer and minimum two employees with requisite credentials.

The EFMs would be required to segregate the funds and securities of the EIFs from that of other clients, provide information to Sebi on a half-yearly basis, ensure compliance to the Prevention of Money Laundering Act and other regulations.

However, EFMs would be exempted from several provisions of the PMS Regulations with respect to the EIF, and would have to comply with the applicable regulatory and disclosure requirements of the jurisdiction of the EIF.

Source: http://economictimes.indiatimes.com/articleshow/52640330.cms

SEBI warns investors against barred entities

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The Securities and Exchange Board of India (Sebi) on Monday warned unlisted companies and their directors who fraudulently raised money and asked investors not to be lured by their schemes.

The market regulator has listed out 235 unlisted companies that have lured retail investors by issuing securities such as non-convertible debentures/non-convertible preference shares in the garb of private placement. Orders against these firms were passed between April 2003 and May 2016.

“Companies are cautioned not to issue securities to public without complying with provisions of law. Failing which Sebi will be constraint to take stringent action against such companies and their directors,” Sebi noted.

The companies against which action has been taken include Jeevan Suraksha Real Estate, Roofers Infra Projects, Shankalp Food and Beverages, Silicon Projects, Pious Agro Industries, Ravi Kiran Realty, Angela Agrotech, Amrit Projects, MARS Agrofarm Developers, and Golden Heaven Agro Project India.

In another note, Sebi also warned investors against collective investment schemes (CIS) of entities barred by the market regulator from raising money.  The regulator passed orders against 100 entities and its directors carrying on unregistered CIS.

“As part of interim directions, Sebi directs the entities and its directors to stop collecting further money under existing / new schemes, not to launch any new scheme or float any new companies/firm to raise fresh money, not to divert or alienate any assets or money collected.”

Apart from Gift Collective Investment Management Company Limited, no other entity is registered with Sebi. Hence, investors are advised to do due diligence before investing in such schemes, said Sebi in its note.

http://www.business-standard.com/article/markets/sebi-warns-investors-against-barred-entities-116060601204_1.html

India ranks second on GRD index on ease of doing business : study

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India has jumped 13 positions from last year to rank second among 30 developing countries this year on ease of doing business, according to a study topped by China.

According to 2016 Global Retail Development Index (GRDI), which ranks top 30 developing countries for retail investment worldwide, a pick-up in GDP growth and better clarity regarding FDI regulations have helped India achieve a second ranking.

Debashish Mukherjee, a partner with A T Kearney and co-head of the Consumer Industries & Retail Products Practice for India and Southeast Asia, said,

India’s strong ranking reflects foreigner retailers increased optimism in its retail market and its vast growth potential. India has relaxed several key Foreign Direct Investment (FDI) regulations in single-brand retail and this has paved the way for multinational firms to enter the market, Mukherjee said.

India’s retail sector has expanded at a compound annual growth rate of 8.8 percent between 2013 and 2015, with annual sales crossing the $1 trillion mark, according to A T Kearney, a London-based business consultancy.
India has also become the world’s fastest growing economy. That, coupled with a large population base and the easing of FDI regulations in the sector, has made it an even more attractive market, it said in the ranking.

We expect to see e-commerce to propel India’s growth and make it a more attractive proposition. However, there are some challenges as well. India remains a challenging and complex market for foreign retailers, where understanding dynamics at the state level is important. Infrastructure bottlenecks including labour laws, complex regulations, high labour attrition rates, and limited high-quality retail space remain areas of concerns for retailers, Mukherjee said.

The country’s retail sector has also benefited from the rapid growth in e-commerce. India is the world’s second largest Internet market and the increasing Internet and smartphone penetration is contributing to the expansion of e-commerce.

As Indian consumers become more comfortable with shopping online, venture capital and private equity firms have boosted investment in the sector, providing further momentum, the report said.

Source: http://yourstory.com/2016/06/india-ranks-2nd-on-ease-of-doing-business/