Brexit to hit eurozone growth, says IMF

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The International Monetary Fund has cuts its economic growth forecasts for the eurozone in the wake of the UK’s vote to leave the European Union.

The eurozone is expected to grow by 1.6% this year and 1.4% in 2017. Before the referendum the IMF had predicted growth of 1.7% for both years.

The IMF also revised down its 2018 growth forecast to 1.6% from 1.7%.

It said medium-term growth prospects for the 19-member bloc were “mediocre” due to high unemployment and debt.

Mahmood Pradhan, deputy director of the IMF’s European Department, said the outlook could worsen if drawn-out negotiations between the UK and the EU led to a continuation of recent trends in financial markets – where investors have shunned riskier assets.

“If that risk aversion is prolonged, we think the growth impact could be larger and at this point, it is very difficult to tell how long that period lasts,” he said in a conference call.

The revised 2017 figure was the IMF’s “best case” scenario, assuming a deal was struck that allowed the UK to retain its access to the EU’s single market, Mr Pradhan said.

However, if the UK decided not to maintain close ties with the EU and chose to rely on World Trade Organization rules, there could be “major disruptions,” he said.

Mr Pradhan added it was “very, very early days to have any strong sense of confidence” about what the eventual relationship between the UK and EU would be.

In the medium-term, challenges such as high unemployment and persistent structural weaknesses in the euro area would continue to weigh on growth, the IMF said.

“As a result, growth five years ahead is expected to be about 1.5%, with headline inflation reaching only 1.7%,” the report said.

It also said that as the euro area was such a big player in world trade, any slowdown could have an impact on other economies, including emerging markets, but it expected this to be “limited”.

Source: http://www.bbc.com/news/business-36743862

No World Recession From Brexit But Risks High, Says IMF’s Lagarde

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International Monetary Fund chief Christine Lagarde said that Britain’s shock vote to quit the European Union has injected significant uncertainty into the global economy but is unlikely to cause a world recession.

But in an exclusive interview with AFP, she also said that Brexit underscores the need for the EU to do a better explaining how it benefits Europeans, amid “disenchantment” with the institution.

And she said that Britain’s move to cut corporate taxes to counter the expected economic fallout from its choice to break with the EU was just a “race to the bottom” that could hurt everyone.

Two weeks after the British referendum on cutting its EU ties, Ms Lagarde, speaking in her Washington offices at the beginning of her second five year term as IMF managing director, called the event a “major downside risk” for the world.

“We don’t think that a global recession is very likely. The immediate effects will be on the UK,” with some spillover into the euro area, she said.

Yet the longer the process for Britain’s withdrawal remains unclear, the worse the effects could be, she said. “The key word about this Brexit affair is uncertainty and the longer the uncertainty, the higher the risk,” she said.

“The sooner they can resolve their timeline and the terms of their departure the better for all. It needs to be predictable as soon as possible.”

But Ms Lagarde, who during her first five years leading the Fund has already endured a substantial amount of turmoil in Europe, said she remained positive over the outcome.

“There will be spillover effects on the euro area. But my optimistic approach of life tells me that Brexit could be a catalyst that could push the EU to deepen its economic integration.”

Source: http://profit.ndtv.com/news/global-economy/article-no-world-recession-from-brexit-but-risks-high-says-imfs-lagarde-1429092

Taxmen told to step up efforts for black money window success

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Income Tax Department has asked its officers to make “all out efforts” to attract potential declarants under the domestic black money window by assuring them of confidential and hassle-free disclosures.

In order to give wide publicity, the CBDT has also suggested putting up posters about the Income Declaration Scheme-2016, at places frequented by potential declarants, like club houses, posh markets, showrooms of high end products.

The four-pronged strategy prepared by the CBDT for the success of the scheme, includes single point contact to ensure confidentiality, setting up of facilitation centres across the country, giving wide publicity and monitoring at the highest level.

Finance Minister Arun Jaitley in Budget had announced a four-month window under the Income Declaration Scheme 2016. The scheme, which opened on June 1, allows domestic black money holders to declare ill-gotten wealth and come clean by paying a tax and penalty totalling 45 per cent.

“All out efforts are to be made to ensure the targeted taxpayers are well informed about the scheme and are adequately guided and facilitated for filing declarations so that they can avail maximum benefits under the scheme, which is under highest consideration of the government during the coming months,” the CBDT said in an office memorandum.

In order to ensure confidentiality of the declarants, the Central Board of Direct Taxes (CBDT) has said only Principal Commissioner or Commissioner Income Tax should act as a “single point of contact” for interacting with the declarants.

“Such Pr CIIT/CIT should be the one and only point of contact with the respective declarant. The idea is to ensure the declarant is not exposed to multiple persons in the office so that his confidentiality is not compromised and he is able to file the declaration in a hassle free manner,” it added.

The detailed action plan for the success of black money disclosure scheme was discussed at the annual conference of tax administrators last week.

In its strategy, CBDT has asked Principal Commissioners and Commissioners to provide all “procedural facilities” at the time of disclosure so as to avoid additional interaction with anyone else in the office.

“All records related to IDS-2016 must be kept in the personal custody of the respective Principal CIT /CIT officer in a safe and secure manner,” it said, adding officer with “good inter-personal skills” be deputed as ‘Facilitation Officer’ to answer queries related to the scheme.

In every city where Principal Commissioner is stationed, a “facilitation centre” in the nature of help desk may be opened for disseminating information about the scheme.

The CBDT has also asked its senior officers to hold “frequent meetings” with trade and industry bodies and professional associations, besides organising town halls and seminars.

In order to step up publicity for the scheme at local level, tax officers should disseminate information through posters in regional languages, stalls at local fairs.

In order to ensure monitoring at the highest level, CBDT said ‘IDS Banner’ will become functional next week on its website where the officers would upload their meeting details.

This will help compare the progress made in organising the campaign.

Last year the government came up with a similar scheme for persons having unaccounted black money abroad. Disclosures during that window were charged with a total tax and penalty of 60 per cent.

A total of Rs 4,147 crore of undisclosed wealth was declared during the 90-day foreign black money compliance window that ended September 30. At 60 per cent (30 per cent tax and 30 per cent penalty), the government got a net tax of Rs 2,500 crore from the declarations.

Source: http://www.financialexpress.com/article/economy/taxmen-told-to-step-up-efforts-for-black-money-window-success/294763/

RBI simplifies registration process for new NBFCs

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In order to make the registration process of new non-banking finance companies smoother and hassle-free, the Reserve Bank of India has revised the application form for registration of these companies and the checklist of documents to be submitted.

The number of documents to be submitted by NBFC applicants has been reduced from the existing set of 45 documents to seven to eight in the revised process, the central bank said in a statement.

The RBI said henceforth there would be two different types of applications for non-deposit taking NBFCs (NBFC-ND) based on sources of funds and customer interface.

The first type (Type-I) will be a NBFC-ND not accepting public funds/ not intending to accept public funds in the future and not having customer interface/ not intending to have customer interface in the future.

“Public funds” include funds raised either directly or indirectly through public deposits, commercial paper, debentures, inter-corporate deposits and bank finance but excludes funds raised through issue of instruments compulsorily convertible into equity shares within a period not exceeding 10 years from the date of issue.

“Customer interface” means interaction between the NBFC and its customers while carrying on its business.

The second type (Type-II) will be NBFC-ND accepting public funds/ intending to accept public funds in the future and/or having customer interface/intending to have customer interface in the future

Fast track mode

The RBI said processing of cases for Type-I of NBFC-ND applicants would be on fast track mode. As these companies will not have access to public funds and will not have customer interface, they will be subjected to less intensive scrutiny/ due diligence.

However, the certificate of registration issued to Type I – NBFC-ND companies will be conditional. These companies will be prohibited from accessing public funds and having customer interface, the RBI said.

In case Type-I companies intend to avail public funds or intend to have customer interface in the future, they are required to take approval from the Reserve Bank of India, Department of Non-Banking Regulation.

Source: http://www.thehindubusinessline.com/todays-paper/tp-money-banking/rbi-simplifies-registration-process-for-new-nbfcs/article8742967.ece

Amazon India sees 250% annual growth in sellers

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US-based Amazon on Friday said it had witnessed a 250 per cent year-on-year growth in bringing new sellers on board, as it looks to tap into the booming e-commerce market in India.

The company, which is making multi-billion dollar investments in India, has about 85,000 sellers on board.

“We started with 100 sellers three years ago and now we have about 85,000 sellers growing at 250 per cent year-on-year and adding nearly 90,000 products a day,” an Amazon India spokesperson stated.

Amazon, which competes with the likes of Flipkart and Snapdeal, has cut its commissions by 25-30 per cent across categories such as mobile phones, PCs, electronic devices and personal care appliances.

“We think these revised rates can significantly help sellers to perform even better and succeed in their business. In addition, we continue to innovate and offer best in class services such as Fulfilment by Amazon, Easy Ship, Seller Flex, etc, to help them with fulfilment/logistics, so that they can focus on their business,” the Amazon spokesperson said.

Flipkart, on the contrary, had recently increased its commissions across key segments and asked sellers to bear the costs of logistics in case of returns.

Recently, Amazon Chief Executive Officer Jeff Bezos had said the company will invest $3 billion in India. This is in addition to the American e-commerce giant’s $2-billion infusion in 2014, taking its total investments here to over $5 billion.

The funds will be channelled towards enhancing customer and seller experience, Amazon India managing director Amit Agarwal had told PTI.

“India is a key market for Amazon and we will work towards continuing to reduce operating costs for sellers backed by good logistics and fulfilment capabilities,” he had added.

 

Source: http://www.business-standard.com/article/companies/amazon-india-sees-250-annual-growth-in-sellers-116061700852_1.html

FIPB clears FDI proposals worth Rs 710 crore

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The proposals approved included Advanced Enzyme Technologies’ foreign investment worth Rs 480 crore, a Finance Ministry official said.

Foreign Investment Promotion Board (FIPB) today approved four FDI proposals entailing overseas investment of about Rs 710 crore.

The proposals approved included Advanced Enzyme Technologies’ foreign investment worth Rs 480 crore, a Finance Ministry official said.

The Board also cleared proposals of Corona Remedies, Macmillan Publishers International and Ordain Health Care Global.

The FIPB, headed by Economic Affairs Secretary Shaktikanta Das, today considered 14 investment proposals.

Three proposals, which were rejected included that of Flag Telecom Singapore Pte Ltd and Star Den Media Services Pvt Ltd.

Also, eight proposals, including that of IBM India Ltd, were deferred.

FIPB can clear FDI proposals envisaging investment of up to Rs 5,000 crore and those involving higher investment are approved by the Cabinet Committee on Economic Affairs (CCEA).

FDI in most sectors are allowed through an automatic route but in certain sectors proposals have to go through the FIPB.

Source: http://economictimes.indiatimes.com/articleshow/52690601.cms

Indian private bank new loans outpace state-owned rivals for first time

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India’s privately owned banks are extending new loans faster than their state-run rivals for the first time ever, as government lenders struggle to bring surging bad loans under control.

New credit from private lenders amounted to Rs.3,50,000 crore ($52.4 billion) in the year to 31 March, taking their outstanding advances to Rs.17,90,000 crore, while state banks’ loans grew Rs.2,00,000 crore to Rs.51,20,000 crore, according to a finance ministry document, a copy of which was reviewed by Bloomberg News. Finance ministry spokesman D.S. Malik didn’t respond to two calls to his mobile phone on Tuesday seeking comment.

The stressed-loan ratio for state banks climbed to a 16-year high of 14.34% in the year through March, according to the document. Surging delinquent loans and inadequate risk buffers at India’s government-controlled lenders, which account for more than 70% of loans in the nation’s banking system, have been hindering Prime Minister Narendra Modi’s attempts to revive credit growth in Asia’s third-largest economy.

“Private sector banks will continue to take away market share from state-run banks in coming years,” Siddharth Purohit, a Mumbai-based analyst at Angel Broking Ltd., said by phone. “With limited capital and high bad loans, most state-run banks are not in a position to focus on loan growth.”

The private-sector banks’ faster loan growth is in line with a May 2014 estimate from a central bank-appointed committee, which predicted that the lenders’ share of total Indian banking assets will rise to 32% by 2025, from 12.3% in 2000.

Capital constraints.

Modi needs to revive bank lending as he strives to maintain the fastest growth rate among the world’s major economies. Indian credit grew 9.8% in the 12 months through 13 May, compared with an average of about 14% over the last five years, fortnightly central bank data compiled by Bloomberg show.

Timely capital infusions into constrained public sector banks will aid credit flow, the Reserve Bank of India (RBI) said in its monetary policy statement on Tuesday. Rules requiring government stakes of at least 51% have curtailed state banks’ ability to sell shares, while an audit of loan books by the RBI uncovered more soured debt, making them less capitalized than privately-owned lenders.

While some investors had anticipated the six-month-long central-bank audit, which ended on 31 March, to result in higher non-performing-asset (NPA) disclosures, the scale of losses and statements from bank executives highlighting the uncertain outlook for bad debt have surprised analysts. Thirteen state-owned lenders reported combined losses of Rs.18,000 crore for the year to March, finance ministry data shows.

Government lenders are the worst performers this year on the S&P BSE India Bankex Index, led by Punjab National Bank’s 32% slump and State Bank of India’s 6.4% drop. The gauge has gained 6.1% this year. Bloomberg

Source:  http://www.livemint.com/Industry/a9wEXC7uUXU0HpWgGYJEJM/Indian-private-bank-new-loans-outpace-stateowned-rivals-for.html