QBiz: RBI to Inject Rs 10,000 Cr Through Open Market Operations
Reserve Bank of India (RBI).
Reserve Bank of India (RBI). (File Photo: IANS)

QBiz: RBI to Inject Rs 10,000 Cr Through Open Market Operations

1. RBI to Inject Rs 10,000 Crore

The Reserve Bank of India (RBI) on Tuesday, 4 December, said it would inject Rs 10,000 crore into the system through purchase of government securities on 6 December to increase liquidity.

The purchase will be made through open market operations (OMOs).

"Based on an assessment of prevailing liquidity conditions and also of the durable liquidity needs going forward, the Reserve Bank has decided to conduct purchase of... government securities under open market operations for an aggregate amount of Rs 100 billion on 6 December 2018," the central bank said.

The OMO operation will help ease tight liquidity situation triggered by a series of defaults by group companies of IL&FS.

(Source: PTI)

2. RBI Panel Likely to Assess Financials of 11 PSU Banks

The Reserve Bank of India (RBI) later this week would take the first step to explore whether lending curbs imposed on weaker banks — better known as the prompt corrective action — could be partly lifted on some of the state-owned lenders.

The central bank’s Board for Financial Supervision (BFS) is scheduled to meet on Thursday to analyse latest financials of the 11 banks under the PCA framework to decide on the matter, according to the committee’s agenda finalised a few days ago.

The BFS members would give its recommendations to the RBI board which would take a final call on the contentious subject.

(Source: The Economic Times)

3. IL&FS Board Draws up Asset Sale Road Map

The Uday Kotak-led board of Infrastructure Leasing and Financial Services (IL&FS) is taking a string of steps — from selling stakes in subsidiaries and real estate to reducing wage bills — to raise about Rs 16,000 crore as it battles to show progress to lenders who want concrete steps towards monetisation, said two persons familiar with the matter.

The company would sell IL&FS Education, IL&FS Technologies, ONGC Tripura Power Company and IL&FS Paradip Refinery Water Limited in the coming weeks and is also looking to monetise overseas assets, said the persons on condition of anonymity.

Sale of these assets may generate Rs 8,000-10,000 crore, according to initial estimates. Another Rs 400-500 crore is expected from the sale of its securities business, and roughly Rs 8,000 crore from the renewable energy business. These are enterprise values and there can be transactions where the company may not get any value for its equity.

(Source: The Economic Times)

4. MUDRA Loans: Big States Get a Major Share; Smaller Ones Left High and Dry

The growth of entrepreneurship in the non–corporate small business sector (NCSB) in smaller states has not received any major boost under the Central government’s ambitious MUDRA loan scheme.

Data show that States that already have higher Credit–Deposit (C-D) ratios — a yardstick that indicates better access to institutional credit — are the ones reaping the benefit of the scheme.

While six large States led by Tamil Nadu have received over 50 percent of the Rs 6.82-lakh crore MUDRA loans disbursed till date, a majority of North-East States and Union Territories have not received even 1 percent of the total MUDRA loans.

(Source: The Hindu Business Line)

5. GST: New Returns System From FY20 Only

Even as the goods and services tax (GST) revenue is trailing, the long-delayed comprehensive returns-filing system won’t come into effect even from 1 January, the date announced for its launch after a high-level panel mooted a simplified format for such returns, but only from next fiscal.

The triplicate return forms — that include the summary return and forms for inward and outward supplies — will be rolled out only from 1 April 2019, new revenue secretary Ajay Bhushan Pandey said on Tuesday, 4 December.

(Source: The Financial Express)

6. SFIO Says IL&FS Financial Arm Indulged in Window-Dressing

IL&FS Financial Services (IFIN) kept extending loans to several companies so that they could avoid defaulting on their debt repayments, according to the report of the Serious Fraud Investigations Office (SFIO).

By doing so, the SFIO report says that IFIN was able to inflate its financial performance by ensuring that interest income is generated on the loans that have been regularised through fresh funding which otherwise wouldn’t have been considered as income in its financial statements. Moreover, a fresh interest income was generated through the disbursement of these loans.

Finally, provisioning for non-performing assets (NPA) was deflated to display a strong balance sheet and healthy asset quality on all these loans.

(Source: The Financial Express)

7. Unilever-GSK Deal Under Taxman’s Lens

Taxmen have begun to scrutinise the $3.8-billion (€3.3-billion) Unilever-GSK transaction and could raise demand on the value of the sale of Horlicks brand to the Anglo-Dutch multinational by invoking provisions relating to indirect transfer of shares, tax experts and lawyers said on Tuesday, 4 December.

Tax officials could also raise the issue that goods and services tax (GST) of 12 percent is applicable on the overseas transaction as its value is derived from the Indian market, but the two companies and their lawyers are expected to counter this.

(Source: The Economic Times)

8. Banks Face Bitter Harvest From Farm-Loan Waivers

The increasing demand for farm-loan waivers and farmers holding off loan repayment in anticipation of write-offs are giving banks sleepless nights.

Last week’s mega rally of farmers in the national capital has left many bankers quaking.

“The expectation of agricultural loan waivers next year when elections to the Lok Sabha and some key States are slated to be held is so high that farmers in many States have gone slow on their repayments, leading to a ballooning of the bad loan portfolio,’’ said a senior official of a leading public sector bank.

While overall data for banks are not available yet, individual cases of election-bound States with loan write-off prospects show an increase in agri-NPAs.

(Source: The Hindu Business Line)

9. Govt Says No Scope For a Cut in Corporate Tax Rate in the Near Future

The government is unlikely to cut corporate income tax rate for large companies to 25 percent as promised in its FY16 budget because of revenue constraints, a senior tax official said.

Tax rates can’t be cut further without a supporting mechanism to prevent evasion, said Akhilesh Ranjan, member (legislation) at Central Board of Direct Taxes. That European Union (EU) nations are considering a reduction in corporate taxes or the US has lowered the rate to 21% is not sufficient to sway India to reduce taxes, he said on Tuesday, 4 December.

Each country has to decide the rates according to its needs, added Ranjan, who is the convener of a task force on the new direct tax code.

(Source: Live Mint)

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