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VIKAS PARSHURAM SAMWATSARE

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RBI’s proposal to increase LTV ratio likely to assist gold loan cos

News Details
The Reserve Bank of India’s (RBI) proposal to increase the loan to value (LTV) ratio from 60 per cent to 75 per cent is expected to assist the gold loan companies in increasing their business volume, ICRA said in a report. "Standardization of valuation of gold and increase in the LTV cap from 60 per cent to 75 per cent would help gold loan companies increase business volume," the report stated. While recognizing the positive role of banks as well as non-banking financial companies (NBFCs) in monetizing gold, the report said that the gold loan NBFCs are not likely to increase their current market share as banks have a competitive advantage over such NBFCs.
"As banks enjoy a competitive advantage over NBFCs, and given the healthy risk-adjusted returns and growth prospects in the gold loan segment, banks could step up the pace of growth of gold loans. Were this to happen, the market share of NBFCs in gold loans may not increase from the current 28 per cent by FY12-end," the report added. However, the rating agency added that the growth rate of gold loan companies is likely to witness a slowdown as against the last 3 years due to their significant dependence on the wholesale funding sources. "Significant funding constraints (despite possible easing) may slow down the pace of growth of gold loan companies, as such entities are highly reliant on wholesale funding sources," the report said.
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Govt seeking to amend controversial tax rules next month

 The government is likely to approach parliament next month to water down retrospective tax rules that damaged investor confidence, two finance ministry officials said on Monday, a move that may help settle British-based Vodafone Group Plc's long-runnning $2 billion tax dispute.

Vodafone, the largest overseas corporate investor in India, has repeatedly clashed with Indian authorities over taxes since it bought Hutchison Whampoa's local mobile business in 2007.

The government was heavily criticised by the corporate sector for introducing the tough tax rules last year at a time India was suffering a sharp economic slowdown and trying to encourage investment.

Finance Minister P. Chidambaram has for several months been considering recommendations by a government panel that said past mergers and acquisitions should not be taxed.

Vodafone, the world's biggest mobile operator by revenue, said in a statement last week that it had received a reminder from Indian tax authorities on the disputed tax dues, adding it believed that no tax was payable on the deal.

"(The) Finance Minister is likely to approach the parliament next month on the retrospective issue," said a senior finance ministry official, who asked not to be identified because of the sensitivity of the issue.

He declined to say whether the government was considering a waiver of the entire tax bill or cancelling interest and penalty charges on the original tax demand.

However, the officials said Chidambaram was likely to introduce amendments in the 2013 Finance Bill to revise the amendments that were introduced last year along with the budget.

Then Finance Minister Pranab Mukherjee introduced an amendment enabling authorities to make retrospective tax claims on long-concluded corporate deals after the Supreme Court had quashed the government's tax demand on Vodafone.

A committee headed by the finance minister's economic adviser, Parthasarathi Shome, has recommended that past mergers and acquisitions should not be taxed, or the government should waive both interest and penalty.

The officials said Chidambaram was looking at the recommendations to work out a solution to the Vodafone dispute by considering its impact on revenue receipts as well as investor sentiment.

They said the government needed parliament's nod to provide tax relief to the company, as this would also affect tax demands amounting to at least $5.5 billion for other such deals.

On Saturday, the Economic Times reported that tax authorities had asked Vodafone to pay 140 billion rupees, including interest on the tax dues.

One official said the letter was just a reminder to Vodafone to pay the tax following last year's amendment in the Act. "It is not a fresh tax notice," the official said, adding the parliament could provide relief.

The official said Vodafone had also expressed willingness to hold talks, and a solution could soon be reached.

Last April, Vodafone threatened the Indian government with arbitration proceedings in its fight over the retrospective tax proposal.
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Tata Power’s subsidiary commissions fourth 800 MW unit at Gujarat power plant 

 

News Details
Tata Power said that its subsidiary has synchronised the fourth 800 MW unit of its Mundra power plant in Gujarat. The development was achieved by its wholly owned subsidiary Coastal Gujarat Power Ltd. “The synchronisation of Unit 4 of the Mundra ultra mega power project is a significant milestone given the critical power shortage situation in the country. The Mundra power plant is one of the most efficient and environment-friendly plants based on super critical technology,” said Tata Power, MD, Anil Sardana.
Prior to the development, Tata Power has commissioned the first 800 MW at the plant in March 2012, while the second and third unit was commissioned in July and October 2012 respectively. Meanwhile, with the development in place, the total thermal power generation capacity of Tata Power has reached at 6847 MW.
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Govt likely to infuse $544 mln in FY13

 The government has indicated a capital infusion of 30 billion rupees into State Bank of India in the current fiscal year ending in March 2013, the bank's chairman said on Monday.

The infusion into the country's biggest bank will be done through a preferential allotment of shares, Pratip Chaudhury told reporters.

Capital infusion plans for the next financial year have not been finalised yet, Chaudhury added.
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 RAKBANK implements Infosys’ Finacle to improve customer services

 
Talking about another milestone achieved, Infosys said that the National Bank of Ras Al-Khaimah (RAKBANK) has announced the successful implementation of Infosys Finacle core banking solution. “The bank is now harnessing the full power of Finacle to better anticipate customer needs, improve customer experience and launch innovative products faster,” said the company in a filing to Bombay Stock Exchange. With the implementation, the bank gets to enjoy the comprehensive customer information provided system and thus utilising the same in bringing new product to the markets.
Additionally, the solution also automates the core functions of the bank’s data centers ensuring reduction in manual errors and streamlined operations. “RAKBANK is one of our valued customers in the Middle East. This partnership with Infosys Finacle is just the beginning of a transformation that will help RAKBANK deliver best-in-class banking to its customers across the region,” said Infosys, Finacle, Global Head, Haragopal M.
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Consumers will adjust with fuel prices hike if done in phased manner

 
Happy with the government’s nod to let state run oil firms hike the prices of fuels in the year, Bharat Petroleum Corporation Limited (BPCL) said the hike would be done in a phased manner over a period of one year as it will help consumers adjust to the same. “We should increase it in a phased manner. It can be a rupee per month which will not be a shock to the consumer… Since the hike will happen over a period of one year, it will help consumers adjust to the hike,” said BPCL, chairman, R K Singh.
The statement was given on the back of Finance Minister P Chidambaram announcing a roadmap to decontrol diesel and other petroleum products in a phased manner. The development brought cheers to the loss making oil companies, which are incurring losses despite government compensating for subsidising diesel alone. As per the calculations, the oil companies are incurring losses of over Rs 10 on every litre of fuel sold.

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NEWS COPYRIGHT VIKAS PARSHURAM SAMWATSARE 

 
Published on Monday, January 07, 2013