Banking / Financial News at a Glance
🍒 PSB mergers nearly done, 12 banks almost right for India: Finance Secy : The amalgamation of 10 public sector banks into four has nearly ended the consolidation process and created almost the right number of banks to cater to the needs of the aspirational and new India, Finance Secretary Rajiv Kumar said This exercise will create six global size banks and will bring down the number of nationalised public sector banks to 12 from 27 in 2017."This is almost the right number of the banks which the country needs," he told PTI.The government on August 30 announced consolidation of 10 large public sector banks into four.He described the government's decision as a building block for achieving USD 5 trillion economy target."To support next level of growth, the country needed big banks. The mega merger announced on August 30 aims to achieve that objective. We will now have six mega banks with enhanced capital base, size, scale and efficiency to support high growth that the country requires to break into the club of middle income nations," he said.The consolidation will help create strong and globally competitive banks with economies of scale and enable realisation of wide-ranging synergies, he said adding that now they would have wider reach, stronger lending capacity and better products and technology to serve customers of new India. - Business Standard
🍒 Finance Ministry raises governance bar for non-official directors at PSBs : The Finance Ministry has come up with a code for non-official directors as part of a new set of measures introduced to enhance governance in public sector banks (PSBs) through improved effectiveness of non-official directors (NODs). Peer review of NODs has also been stipulated upon completion of one year from the date of his/her nomination. The concerned PSB will now have to file reports with the Finance Ministry on the performance evaluation of NODs by the board of directors. NODs are directors nominated by the government, as promoter, at PSBs.To enhance the effectiveness of NODs, the Finance Ministry has tasked PSBs to familiarise NODs through various programmes on topics such as cyber security, use of technology in banking, macroeconomic and fiscal policy, credit appraisal, risk management, and treasury operations. - Business Line
🍒 18 public sector banks hit by 2,480 fraud cases of Rs 32,000 cr in Q1: RTI : A total of 2,480 cases of fraud involving a huge sum of Rs 31,898.63 crore rattled 18 public sector banks in the first quarter of this fiscal, an RTI query has revealed. The country’s largest lender State Bank of India (SBI) remained the biggest prey to frauds with 38 per cent share, Neemuch-based activist Chandrashekhar Gaur told PTI on Sunday quoting an official of the RBI who furnished him replies to his RTI application. As many as 1,197 cases of cheating involving Rs 12,012.77 crore were detected in SBI in the first quarter, according to the RTI reply. After SBI, Allahabad Bank faced the heat with 381 cheating cases involving Rs 2,855.46 crore. Punjab National Bank stood third in the list with 99 sham cases worth Rs 2,526.55 crore. However, the information provided by the RBI does not give specific details of the nature of banking fraud and the losses suffered by banks or their customers. On losses suffered by PSU banks due to frauds, the RBI said it did not have figures available as to how much amount was lost by theses banks during the period under review. - Business Line
🍒 Merger of public sector banks: Has governance been given short shrift? : The word “merger” was used only once in the recommendations by the committee headed by P J Nayak that reviewed the governance of boards of banks in 2014. Even former RBI Governor Y V Reddy has been categorical in his assessment on the impact of the move to merge 10 public sector banks (PSBs) into four, when he recently told a television channel: “Merger won’t solve governance issues.”The government while announcing the latest merger plans for PSBs did say the boards of banks shall get more freedom in the selection of independent directors and in deciding the role of board members. Among the measures were allowing banks to appoint chief risk officers at market-linked remuneration. But, the government’s silence on the road map to change the governance structure of PSBs make experts wary of the road ahead. Experts point out that there has been no fundamental change in the governance structure of the merged banks. After the current round of mergers, there will be 12 large PSBs. “If anything, the risks have only increased as now they are concentrated with less number of individuals having greater powers, without any accountability,” says Shriram Subramanian, founder and MD, InGovern Research Services, a proxy advisory firm. Many experts feel for governance and accountability to improve, the nomination and remuneration committee of the board has to play a key role in the appointment of directors, rather than the government or the Reserve Bank of India. This has to be linked to the reduction of the government’s stake in banks, they suggest. - Business Standard
🍒 PNB puts up for sale 11 NPA accounts to recover dues of Rs 1,234 crore : State-owned Punjab National Bank (PNB) has put up for sale nearly a dozen non-performing assets (NPA) to recover dues of more than Rs 1,234 crore. The lender has invited bids from asset reconstruction companies (ARCs)/ NBFCs/ banks/ financial institutions for 11 NPA accounts. The accounts include Visa Steel, which has irrecoverable dues of Rs 441.83 crore, IndBarath Energy (Utkal) Rs 414.23 crore, Aster Pvt Ltd Rs 113.57 crore and Om Shiv Estates Rs 100.16 crore. The sale is on 100 per cent cash basis, PNB said in an advertisement.The bank has asked the prospective bidders to expedite the process of due diligence, saying it will make all possible efforts to bring copies of documents at one place for verification. The prospective buyers shall be intimated separately, depending upon their response.The prospective bidders can evince their interest by September 12.The last date to submit bids is September 20, 2019. The bids will be opened on September 21. - economic times
🍒 SBI sought issuance of 147 Look Out Circulars in last five month: RTI : The Country's largest public sector bank -- State Bank of India -- sought issuance of 147 Look Out Circulars (LoC) in the last five months in connection with bank fraud cases, an RTI response from the bank said. Data shows that the bank started seeking LoC from the Bureau of Immigration from April this year.Between April and August, it issued request seeking LoC against 147 individuals to prevent them from leaving the country, the bank said in response to a Right to Information query filed by Pune-based activist Vihar Durve said.On October 12, 2018, the Home Ministry included Chairman, Chief Executive Officers and Managing Directors of public sector banks in the list of individuals who can seek issuance of Look Out Circulars against offenders to prevent their escape from the country, it said. According to data provided in Parliament in December last year, about 49 economic offenders have escaped to different countries and the government is making attempts to bring them back. -economic times
🍒 Bank of India launches festive offer; waives loan processing charges : State-owned Bank of India (BoI) under its festive offer for retail products is offering home loans at concessional interest rate with no processing charges to woo customers. The bank has waived loan processing charges and will provide home loan at concessional rates, BoI general manager Salil Kumar Swain said. Home loan of up to Rs 30 lakh would be available at 8.35 per cent while loan above Rs 30 lakh would be linked to repo rate, he said. At the same time, the bank offering education loan at competitive rate, he added. The bank has also launched an SME welcome offer, he said, adding, loans between Rs 50 and Rs 5 crore would be available at concessional rate depending on value of security. - economic times
🍒 Allahabad Bank’s bonds put on ‘rating watch evolving’ : Credit rating agency India Ratings and Research (Ind-Ra) has placed state-run Allahabad Bank’s outstanding Rs 1000 crore Basel III compliant bonds on Rating Watch Evolving (RWE), following the government’s announcement about the Kolkata-based lender’s proposed merger with Indian Bank. In a stock exchange filing on Saturday, Allahabad Bank said India Ratings, the Indian unit of the US-based Fitch Group, has placed its Long Term Issuer Ratings of “IND AA-” on Rating Watch Evolving (RWE) after the finance ministry’s announcement regarding the proposed amalgamation.According to Fitch Ratings’ rating definitions, Rating Watches indicate that there is a heightened probability of a rating change. Rating outlook may be described as ‘Evolving’, where the fundamental trend has strong, conflicting elements of both positive and negative. Rating Watches are designated as ‘Evolving’, if ratings may be raised, lowered or affirmed. However, ratings can be raised or lowered without being placed on Rating Watch first. - Moneycontrol.com
🍒 AP Mahesh Bank profit rises 27% to ₹54 crore : Andhra Pradesh Mahesh Co-Op Urban Bankhas posted has posted a profit before tax of ₹54.43 crore in the financial year ended March 30, 2019, a 27 per cent growth over the previous year. The business mix of the bank has crossed ₹3,829 crore. The bank also declared a dividend of 20 per cent at the annual general body meeting held on Saturday. - Business LIne
🍒 Swiss data on closed bank accounts can give clue to Indians' hidden wealth : As India prepares to analyse troves of Swiss banking details of its citizens, a large portion of the first tranche of data being shared by Switzerland under an automatic information exchange framework this month relates to accounts that have been already closed due to fear of action, bankers and regulatory officials said. However, the data that was prepared by all Switzerland-based banks under a direction from the Swiss government for despatching further to the Indian authorities provides full details of the entire flow of funds to and from all the accounts that were active even for a single day in the year 2018, bankers said.The data can be quite useful for establishing a strong prosecution case against those who had any unaccounted wealth in those accounts, as it provides entire details of deposits and transfers as well as of all earnings including through investments in securities and other asset classes, they said. - Business Standard
🍒World’s worst bad-loan mess set to worsen on India’s cash crunch : A prolonged shadow-banking crisis and hurdles in bankruptcy rules are set to keep India atop the world’s worst bad-debt pile, even as Italy, which held the title previously, quickens the clean-up of its lenders. Moody’s Investors Service to Credit Suisse Group AG. warned that more loans may sour in the Asian nation’s banking system. More than 2.4% of total loans in India’s banking system may be under stress on top of the 9.6% bad debt ratio as of June, the highest among major economies, Credit Suisse estimates shows. Italy, on the other hand, has nearly halved its ratio to 8.5% in the last three years.The failure to slash stressed assets is undermining India’s efforts to revive economic growth that has cooled to a six-year low. A cash crunch in the shadow-banking sector that started with the collapse of IL&FS Group last year and the delays in the bankruptcy process are adding to the challenges faced by banks as they seek to tidy up their balance sheets. - economic times
🍒PSU debt raising through bonds gained, NBFCs faced challenge: Study : The loss of fund-raising capability through corporate debt bonds by non-banking financial companies (NBFCs) resulted in the gain for public sector financial institutions. This increased their share in debt issues by 8 percentage points in 2018-19, said an Assocham-Crisil study. Defaults by Infrastructure Leasing & Financial Services (IL&FS) at the beginning of September 2018 created panic and led to a dip in investor confidence towards lending to non-banking finance companies (NBFCs). - Business Line
🍒 Traffic violations could soon increase your motor insurance premiums : You may soon have to pay more motor insurance premium if you violate traffic rules as Insurance regulator IRDAI has set up a nine member working group to examine a system of linking of motor insurance premiums with traffic violations. The working group--which has to submit its report in two months-- is headed by Anurag Rastogi, chief actuary and chief underwriting officer, HDFC ERGO. Any such move of linking motor insurance premium with traffic violations will be a setback for bad drivers, who are recently faced with higher penalties for traffic violations. From September 1, traffic violations attract higher penalties as per the recent amendments to the Motor Vehicle Act. - Business LIne
🍒 Sebi working on mobile app for e-voting to facilitate greater retail participation : : Markets regulator Sebi is working on a mobile app for e-voting by retail investors of listed companies to facilitate greater participation in management proposals, especially those related to corporate governance. Further, the regulator said it plans to provide relevant links to the recommendations of registered proxy advisors to retail investors in a to bid facilitate such investors in taking informed decisions on the proposals of listed entities.These move are aimed at strengthening the corporate governance norms of listed companies."In order to ease the process of casting e-voting thereby facilitating greater participation of the retail investors, the designing of a common mobile app for e-voting is in progress," the Securities and Exchange Board of India (Sebi) said in its annual report for 2018-19. Further, Sebi said "the option of providing relevant links to the recommendations of Sebi registered proxy advisors is also under consideration." This move will help investors in taking informed decisions on the proposals of the listed entities. - economic times
🍒 Six of top-10 firms shed Rs 87,973.5 crore in m-cap; TCS, HDFC biggest drags : Six of the 10 most valued domestic firms suffered a combined erosion of Rs 87,973.5 crore in market valuation last week, with TCS and HDFC taking the biggest hit. Reliance Industries (RIL), HUL, ITC and ICICI Bank were the other firms which witnessed a drop in their market capitalisation (m-cap), while HDFC Bank, Infosys, Kotak Mahindra Bank and State Bank of India (SBI) were on the gainers' side. - Business Line.
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Nirmala Sitharaman on GST rate cut demand: GST Council to take call, it’s not in my hands:
READ MORE- https://www.gststation.in/nirmala-sitharaman-on-gst-rate-cut-demand-gst-council-to-take-call-its-not-in-my-hands/
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TDS on cash withdrawals of over Rs 1 crore: Under the newly introduced Section 194N, a 2 per cent TDS on cash withdrawals of Rs 1 crore or more from banks or post offices kicked in on September 1.
CBDT clarified that if a person has already withdrawn Rs 1 crore or more in cash up to August 31 in the current fiscal, this TDS amount will not apply. Only subsequent withdrawals will be considered. "However, since the threshold of Rs 1 crore is with respect to the previous year, calculation of amount of cash withdrawal for triggering deduction under section 194N of the Finance Act shall be counted from April 1, 2019.
The limit of Rs 1 crore in a financial year is with respect to per bank or post office account and not a taxpayer's individual account. For example, a person having three bank accounts with three different banks can withdraw cash up to Rs 3 crore in a fiscal without any TDS.
TDS at the time of purchasing immovable property: Under Section 194-IA of the Income Tax Act, when a buyer buys immovable property, that is a building or part of a building or any land other than agricultural land, costing more than Rs 50 lakh, he has to deduct TDS at 1% of the total sale consideration. But in Budget 2019, amended the Act to include all charges such as club membership fee, car parking fee, electricity or water facility fee, maintenance fee, advance fee or any other charges of similar nature, which are incidental to the transfer of immovable property, while calculating TDS. This new rule is applicable for immovable property purchased on or after September 1.
So a house costing Rs 60 lakh, which till last week would incur TDS payment of Rs 60,000 (@1 per cent), will now be a costlier proposition. Assume you have paid Rs 2 lakh towards parking fee, Rs 1 lakh for water facility fee and Rs 1 lakh for electricity fee on September 1, your total sale consideration for the same house will now be Rs 64 lakh and the TDS payable will be Rs 64,000.
TDS on payments made to professionals and contractors: Another new addition to the Income Tax Act - introduced in the Finance Bill, 2019 - is Section 194M which applies to money paid by an individual or HUF for carrying out any contractual work or providing any professional service. If the payment made to a contractor or a professional or brokerage exceeds Rs 50 lakh in a financial year, the taxpayer is required to deduct 5 per cent TDS at the time of crediting such amount. Further if the PAN of the deductee is not available, then TDS will be deducted at 20 per cent.
The definition of contractual work covers advertising, broadcasting or telecasting, carriage of goods and passengers by any mode of transportation, other than railways, catering and manufacturing or supplying a customised product by using material purchased from the customer. On the other hand, professional services will include remuneration paid to directors excluding salary, such as sitting fees to attend board meetings, royalty and technical/professional fees.
TDS on life insurance proceeds: If life insurance maturity proceeds received are taxable, then the TDS will now be deducted at the rate of 5 per cent on the net income portion. The net income portion is defined as the total sum received less of the total amount of insurance premium paid. Earlier, the TDS was 1 per cent of the gross maturity payout under the policy.
Any money received from a life insurance policy, where the premium paid on the policy is more than 10 per cent of the sum assured for policies issued after April 1, 2012 - or 20 per cent for policies issued before this date - is fully taxable. Keep in mind that the exceptions to this rule under Section 10(10D) include policies taken after April 1, 2013, on the life of a person with a disability or a disease specified under Sections 80U and 80DDB, where the amount received on maturity is tax-free. The precondition is that the premium paid cannot exceed 15 per cent of the sum assured.
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ACMA seeks uniform 18% GST on all auto components:
READ MORE- https://www.gststation.in/acma-seeks-uniform-18-gst-on-all-auto-components/
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GST rate cut relief likely for compact cars, parts makers:
READ MORE- https://www.gststation.in/gst-rate-cut-relief-likely-for-compact-cars-parts-makers/
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Capital Market updates
TVS Motor Company’s August sales fell 15% YoY. The festive season is also not likely to be any better. Stay away from this counter for a while.
📌 The government has approved infusion of Rs.9300 crore in IDBI Bank, which will help it come out of RBI’s PCA (Prompt Corrective Action) framework. A good time to invest at the current beaten down level.
📌 VST Tillers Tractors’ August tractor sales jumped 57% YoY to 813 units. Its future looks bright. Accumulate.
📌 Thomas Cook’s subsidiary, Sterling Holiday Resort, is contributing to its growth. Despite rumours of declining profits, Thomas Cook remains a good buy.
📌 The Carlyle group and General Atlantic (Singapore) are likely to raise their investment in PNB Housing Finance. Moreover, Moody’s has raised its outlook to stable on the back of recent mergers and declining NPAs. Accumulate.🔺
📌 Maruti Suzuki India has announced a two-day shutdown. A total cut of ~30% in August is likely to hamper its profitability. Stay away from this counter for some time.
📌 Lupin joins Boehringer (West Germany) to develop drugs to treat cancer. Accumulate for the long term.
📌 Mahindra & Mahindra plans to launch its first product i.e. trucks and pick-up vans in association with Ford by 2022. An attractive buy.
📌 A weakening rupee against the dollar augurs well for Wipro. Buy for the long term.
📌 Gujarat State Petronet is ramping up its gas pipelines in Gujarat to ensure higher penetration. Accumulate.
📌 Volumes at the Yes Bank counter have started rising again as the bank plans another QIP. Its lost glory may slowly come back.
📌 JSW Steel plans to raise $350 million to refinance its high interest debts. This will improve its profitability. Accumulate.
📌 Hero MotoCorp has launched ‘BS VI Splendor’, which is priced ~12-15% higher than the current version ‘Splendor iSmart’. Its profitability is likely to improve. Accumulate for long term.
📌 Dr. Reddy’s Laboratories has launched an anti-smoking drug in the US markets. A positive for the company. Accumulate.
📌 Cochin Shipyard has received an order for building 23 boats for the Kochi Water Metro Project. Buy for the long term.
📌 Laurus Labs receives Establishment Inspection Report (EIR) from the USFDA for its Visakhapatnam units. The company has a long way to go. Accumulate.
📌 Aditya Birla Capital will raise Rs.2100 crore through a preferential share allotment to certain investors and the promoters. Buy for the long term.
📌 Polyplex Corporation, which is likely to notch an EPS of Rs.100 for FY20, paid a 510% dividend for FY19. The stock is surprisingly available at Rs.444. This potential bonus candidate is a big buy
📌 Going by its FY19 performance, Shreyans Industries is expected to notch an EPS of Rs.38+ for FY20. Buy for about 50% returns in the medium term.
📌 Dhampur Sugar Mills, which posted 89% higher Q1 PAT, has attracted heavy investment buying. The stock may touch Rs.250.
📌 Going by its expansion initiatives, Pokarna is likely to notch a consolidated EPS of Rs.35 for FY20. The stock may touch Rs.180.
📌 Debt-free and cash-rich IT major, Mastek, has posted an EPS of Rs.43 for FY19 on an equity capital of just Rs.12 crore. A reasonable P/E of 12.5x will take its share price to Rs.540.
📌 Mawana Sugars, which posted an EPS of Rs.11 for FY19, is on a debt-reduction drive. It may notch an EPS of Rs.14 for FY20. Buy for about 50% returns.
📌 Going by its Q1 performance, Refex Industries is likely to post an EPS of Rs.25-27 for FY20. Its future looks bright and the stock is available cheap.
📌 Reliance Jio targets 20 million customers for its gigafiber. This is no easy task given its tariffs. However, Jio holds ~70% stake in Den Networks and Hathway Cables, which together have around 15 million customers and are likely to be converted into Jio users. Hathway Cables can be a good long-term bet.
📌 Capacite Infraprojects recently bagged a Rs.4500 crore order from CIDCO to construct affordable houses in Navi Mumbai. It is also a contractor for Oberio, Arihant and many more developers. A dark horse in the realty space.
📌 UFO Moviez is in talks with Jio for content sharing. The stock is available cheap at Rs.146 considering its 52-week high of Rs.392. With 20% dividend yield, this stock looks very attractive.
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GST cut for auto industry to cost Rs 30,000 crore to govt:
Amid heightened expectations that the Good and Services Tax (GST) Council will cut the tax rates for a host of categories of automobiles as it meets in Goa on September 20,
READ MORE- https://www.gststation.in/gst-cut-for-auto-industry-to-cost-rs-30000-crore-to-govt/
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UT recovers Rs 1 cr tax from bogus firm:
READ MORE- https://www.gststation.in/ut-recovers-rs-1-cr-tax-from-bogus-firm/
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GST cheer for MSMEs: Small businesses to have more filing options in new return filing system:
READ MORE- https://www.gststation.in/gst-cheer-for-msmes-small-businesses-to-have-more-filing-options-in-new-return-filing-system/
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👉RBI informs that Price of the next tranche of the Sovereign Gold Bond issue opening on September 9 has been fixed at Rs 3,890 per gram. The Sovereign Gold Bond Scheme 2019-20 - Series IV will be opened for subscription from September 9 to 13, 2019.
👉SEBI is working on a Mobile App for E-Voting by Retail Investors of Listed Companies to facilitate Greater Participation in Management Proposals, especially those related to Corporate Governance.
👉SEBI is mounting pressure on Credit Rating Agencies – Brickwork Ratings and CARE – to act against its top officials amid allegations they failed to warn investors of the deteriorating financials of IL&FS and its subsidiary companies.
👉SEBI is likely to give approval to Deutsche Bank by next month to operate as a Custodian in the Commodities Space, a move which will enable participation from Institutional Investors, including Mutual Funds and Portfolio Management Service providers, in such segment.
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MCA update on MCA E- Form AOC-4 (Non XBRL) dt 09.09.2019
http://enlightengovernance.blogspot.com/2019/09/mca-update-on-e-form-aoc-4-non-xbrl-dt.html?m=1
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Writ Petition when an alternate remedy of Arbitration is available
Writ petition is liable to be dismissed when an alternate and efficacious remedy of arbitration is available.
Read full article at : https://dasgovernance.com/2019/09/10/writ-petition-when-an-alternate-remedy-of-arbitration-is-available/
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▶ ICAI : Advisory on Auditor’s Reporting on Section 197(16) of the Companies Act, 2013
https://www.icai.org/new_post.html?post_id=15951&c_id=219
▶ CBDT Circular No. 23/2019 dt. 06-09-2019 : Exception to monetary limits for filing appeals specified in any Circular issued under Section 268A of the Income-tax Act, 1961
https://www.incometaxindia.gov.in/_layouts/15/dit/mobile/circular-notification/circular.aspx
▶ ICAI : Extension of the Last Date for Submission of Online Filling up of Examination Application Forms for CA Examinations, November 2019.
https://resource.cdn.icai.org/56658icaiexam070919.pdf
▶ MEF : Last date for submission of online MEF Form for the year 2019-20 is 11th September, 2019 and online Declaration is to be submitted within 10 days of the filling of MEF but not later than 18th September, 2019.