Indian In Focus

Govt indicates printing of Rs 2000 note stopped for now

The government Friday indicated that printing of Rs 2,000 bank notes, introduced post-demonetisation in November 2016, has been stopped for now as there is enough stock in circulation In a tweet, Economic Affairs Secretary Subhash Chandra Garg said printing of notes is planned as per the projected requirement. “We have more than adequate notes of Rs 2,000 in the system with over 35 percent of notes by value in circulation being of Rs 2,000. There has been no decision regarding 2,000 rupee note production recently,” the Secretary said Soon after the sudden decision to ban old Rs 500/1,000 currency notes by the government, the Reserve Bank had come out with the 2,000 rupee note along with a new look 500 rupee note as part of its massive remonetisation exercise The old 500/1,000 bank notes that were scrapped in November 2016 accounted for around 86 percent of the total currency in circulation at that time.

Rupee recovers 34 paise to 69.86 against US $

The rupee appreciated 34 paise to 69.86 against the US dollar in opening trade Friday amid weakening American currency and positive opening of the domestic equity market. Forex traders said, the American currency lost some ground against major currencies overseas, while on the domestic front, the equity market staged a recovery and propped up the rupee. At the Interbank Foreign Exchange (forex) market, the rupee opened higher at 69.95 and rose further to touch a high of 69.86 a dollar, showing a rise of 34 paise over it’s previous close. On Thursday, the rupee weakened for the second straight session and fell 2 paise to 70.20 against the dollar.

Traders, however, said that significant foreign fund outflows and rising crude oil prices weighed on the domestic currency and capped the up move. Foreign funds pulled out Rs 972.81 crore from the capital markets on a net basis, while domestic institutional investors purchased shares worth Rs 34.52 crore Thursday, provisional data showed.

Lack of refinance facility for NBFCS needs debate

The Non Banking Finance Companies (NBFC) do not have a refinancing facility similar to what the housing finance companies have, and that could be one of the points the industry would like to have a debate on, and probably discuss with the Reserve Bank of India (RBI) in the meeting called by governor Shaktikanta Das next week, said Ramesh Iyer, vice-chairman and managing director of Mahindra & Mahindra Financial Services. RBI defines us as an important segment in overall growth. We would expect more stability of support,” Iyer said, speaking during the launch of the company’s public issue of non-convertible debentures (NCD). It would also be important to bring RBI’s attention to how the industry managed the liquidity problem and related issues the industry has faced since September, and what were the pressure points, Iyer said. Representatives of the NBFC industry met Prime Minister Narendra Modi last week, and Das had tweeted on Wednesday his forthcoming meeting with MSME and NBFC industry representatives. How frequently can NBFCs meet RBI so that problems can be fixed before they grow is also an issue to discuss, Iyer said. Speaking about the recent RBI decision to allow banks and NBFCs to restructure MSME loans up to H25 crore, Iyer said it was a good move, but NBFCs have to take a prudent view of that. “Just because regulation allows you, one shouldn’t reschedule. Our view is that we will review every contract and where we think that the particular consumer is circumstantially impacted and needs additional time, we may take a view,” he said.

Swap ratio hurts shares of dena, Vijaya bank

Even as the three-way merger of Dena Bank, Vijaya Bank and Bank of Baroda is proceeding with clockwork precision, brokerages and industry watchers are divided about the gains, while investors voted the proposed swap ratio, announced on Wednesday, with their feet. On Thursday, shares of Dena and Vijaya Bank plunged as much as 20 and 7 percent, respectively, on BSE, with estimates pouring in that shareholders will tend to lose between 6 and 27 percent in value going by the current share price movements. Holding them back, probably, is the hope that the combined entity, which will be the country’s third-largest lender, will find its feet in the quarters to come. But this is contingent on conditions that capital allocation remains adequate, bad loan recoveries pick up the pace, and that integration will be smooth. Above all, the continuity of senior management will determine the success of the merger. Brokerage Antique expects the provisioning requirement could be Rs 16,000 crore to Rs 18,000 crore for the merged entity. While BoB and Vijaya Bank can shore up capital from operating profits, Dena Bank will have to hold the bowl for cash, pegged at Rs 3,500-4,000 crore.

Businesses can claim GST input credit benefit till Mar 2019

In a big relief to millions of businesses, the government has decided to give more time to businesses to claim their input tax credit, which they can do until March this year. The earlier deadline for claiming input tax credit (ITC) ended on October 25, 2018. The Central Board of Indirect Taxes and Customs (CBIC), through a gazette notification, issued an order stating that ITC claims for the maiden year of Goods and Services Tax (GST) rollout (July 2017 to March 2018) will be allowed till March 31, 2019. However, they added the condition that it matches the return filed by their suppliers. Besides, the CBIC has also allowed businesses to correct any error or omission in the filing of the final sales return or GSTR-1 for the period July 2017-March 2018. Now businesses can correct errors in the returns to be filed for January-March 2019. The ITC claims were allowed for businesses earlier provided they generated the invoice, paid taxes and filed returns. However, in the recent order the CBIC has mandated that ITC claims would have to be matched with GSTR-2A, which is auto-generated by the systems based on sales returns filed by suppliers. The government’s move is expected to benefit millions of taxpayers who would collectively claim tax credit worth billions of rupees.

Look into issues concerning accountability of RBI as regulator: par panel to govt

In a hard-hitting report, a parliamentary panel has asked the Reserve Bank to ease capital adequacy norms for banks, review supervisory framework PCA, and urged the government to set up a committee to look into issues concerning accountability of the central bank as a regulator. The standing committee on finance also asked the RBI to evaluate the efficacy of its own guidelines on dealing with frauds. Besides, the committee headed by veteran Congress leader and former Union Minister M Veerappa Moily also suggested increasing the retirement of age of chiefs of public sector banks to 70 years and effect proper manpower planning and HR development strategies in PSBs. The report of the committee was tabled in Parliament on Thursday.

 

SEBI comes out with rules for single regime for FPI and NRI fund flows

Markets regulator SEBI has come out with rules for merger of foreign portfolio investment (FPI) and non-resident Indian/overseas citizens of India routes to bring in a single regime for foreign investors and regulate NRI and person of Indian origin fund inflows. The regulator has also exempted housing finance companies and systemically important NBFCs (non-banking financial companies) from disclosure of increase or decrease in shareholding due to encumbrance or release of encumbered shares, SEBI said in a notification. A similar exemption is already available to scheduled commercial banks and public financial institutions. In another notification dated December 31, SEBI said if single and aggregate NRI/OCI/RI holdings in assets under management of FPI are below 25 percent and 50 percent, respectively, then such persons will be allowed to be constituents of the FPI. In case of temporary breach of investment limits, FPI will need to comply within 90 days and in case it remains non-compliant even after 90 days, no fresh purchases will be permitted and such FPI will have to liquidate its existing position in Indian securities market within 180 days.

Coal ministry increases fuel supply to power plants

The government on Thursday said it has augmented the supply of coal to power plants to meet the country’s energy demands. The development assumes significance as Karnataka Chief Minister HD Kumaraswamy recently met Coal Minister Piyush Goyal and demanded the Centre to ensure immediate supply of coal to Raichur Thermal Power Station. Ministry of Coal has increased the coal stock and coal supply to power plants to meet the energy demands in the country, the coal ministry said in a statement. The coal stock in power plants as on December 31, 2018, was 16.60 million tonnes (MT) as compared with 13.20 MT on December 31, 2017, showing an increase of around 25 percent. As on December 31, 2018, the number of power plants in the critical/super-critical category was nine, compared with 13 on December 31, 2017. The coal stock in power plants on December 31, 2018, was sufficient for 10 days as compared to the coal stock in power plants on December 31, 2017, which was sufficient for nine days, it said. The supply from Coal India Ltd (CIL) to power plants as on December 30 was 357.5 MT as against 332.03 MT as on December 30, 2017, showing a rise of around 7.7 percent.

Indian Economy
Overview	Last	Reference	Previous
GDP Growth Rate (%)	1.9	Jun/18	2
GDP Annual Growth Rate (%)	7.1	Sep/18	8.2
Unemployment Rate (%)	3.52	Dec/17	3.51
Inflation Rate (%)	2.33	Nov/18	3.38
Interest Rate (%)	6.5	Dec/18	6.5
Cash Reserve Ratio (%)	4	Jan/19	4
Balance of Trade (USD Million)	-16670	Nov/18	-17130
Current Account (USD Million)	-19100	Sep/18	-15807
Current Account to GDP (%)	-1.9	Dec/17	-0.6
Government Debt to GDP (%)	68.7	Dec/17	69.6
Government Budget (% of GDP)	-3.53	Dec/17	-3.52
Business Confidence (Index Points)	64.9	Jun/18	60.1
Manufacturing PMI	53.2	Dec/18	54
Services PMI (Index Points)	53.7	Nov/18	52.2
Consumer Confidence (Index Points)	94	Dec/18	95
Corporate Tax Rate (%)	34.61	Dec/18	34.61
Personal Income Tax Rate (%)	35.88	Dec/18	35.54