INCREASED EXEMPTION LIMITS UNDER DTC TO BENEFIT 96PC TAXPAYERS

The proposed increase in exemption limits in the Direct Taxes Code (DTC) Bill will benefit an overwhelming 96 per cent of taxpayers, who earn less than Rs 5 lakh a year.

The DTC Bill, which proposes to exempt income up to Rs 2 lakh from payment of income tax, compared to the existing limit of Rs 1.6 lakh, was introduced by Finance Minister Pranab Mukherjee in the Lok Sabha today.

"The objective of increasing the exemption level and providing little more relief at the low end has been targetted to get benefits across to the largest number of taxpayers," said Revenue Secretary Sunil Mitra.

The government plans to roll out the new direct tax regime from April 1, 2012.

Briefing newsmen after the Bill was tabled in Parliament, Mitra said around 96 per cent of India's taxpayers are in the earning bracket of Rs 1 lakh to Rs 5 lakh.

"95.75 per cent, to be precise, of India's 3.25 crore tax payers are in the slab of Rs 1 lakh to Rs 5 lakh of income. They pay around 30 per cent of our total taxes.

"The slab of Rs 8 lakh and above accounts for 2.2 per cent of our taxpayers, but they pay 60 per cent of the taxes, that leaves 10 per cent which is in the Rs 5 lakh to Rs 8 lakh," Mitra said.

According to the Bill, annual income from Rs 2-5 lakh is likely to attract tax at the rate of 10 per cent, while the Rs 5-10 lakh bracket will be taxed at 20 per cent and above Rs 10 lakh at 30 per cent.

At present, income between Rs 1.60 lakh and Rs 5 lakh attracts 10 per cent tax, while the rate is 20 per cent for the Rs 5-8 lakh bracket and 30 per cent for above Rs 8 lakh.

People earning more than Rs 10 lakh a year may save up to Rs 41,040 in income tax, if the slabs proposed by the DTC Bill come into effect, experts said.

Similarly, the tax burden would reduce by Rs 21,540 for those earning an annual income between Rs 5 lakh and Rs 10 lakh, while those making Rs 2 lakh to 5 lakh could be richer by Rs 7,660, Deloitte Haskins & Sells Partner Neeru Ahuja said

Source: http://economictimes.indiatimes.com/personal-finance/tax-savers/tax-news/Increased-exemption-limits-under-DTC-to-benefit-96pc-taxpayers/articleshow/6462498.cms

LOAN GROWTH REMAINS MUTED, BANKS SWITCH TO COMMERCIALS

Even as loan growth remains muted, banks have increased funding to corporates by way of investments in commercial paper (CP) and bonds, which have risen 20%.

Investments in corporate bonds also termed as non-SLR (statutory liquidity ratio) investments, have gone up Rs 23,080 crore or 20% since end March 2010 from Rs 115,906 crore to Rs 138,986 crore in August 13, according to the data latest released by RBI.

However, investments had dipped Rs 9,359, or 9%, in the year-ago period from Rs 104,773 crore to Rs 95,414 crore. These investments, however, exclude investments in mutual funds.

Data released by the central bank indicates that investments in CPs have gone up the steepest by Rs 9,854 crore or 40% from Rs 24,791 crore to Rs 34,645 crore. While that in stocks and bonds have gone up by Rs 4,535 crore and Rs 8,690 crore, respectively. Moreover, banks have a relatively higher exposure in these instruments.

From a corporate’s perspective, with the base rate system in place, their negotiating power for finer rates in case of short-term loans has significantly dipped compared to the system prevailed in the earlier BPLR (benchmark prime lending rate).

In the earlier system, corporates could negotiate rates at a significant discount to the BPLR. However, with the new base rate system in place, such discounts have been done away with. As a result, corporates are choosing to raise short-term funds through the CP route.

Outstanding CP issuances have risen by over Rs 30,000 crore this year to over Rs 100,000 crore as of mid-July— almost 45% higher to that prevailing in the year-ago period.

Source: http://economictimes.indiatimes.com/news/news-by-industry/banking/finance/banking/Loan-growth-remains-muted-banks-switch-to-commercials/articleshow/6458817.cms

CENTRAL BANK OF INDIA SIGNS MOU WITH DSP BLACKROCK INVESTMENT MANAGERS

Central Bank of India, a leading Nationalized Bank of the country has signed a distribution agreement with DSP BlackRock Investment Managers in Mumbai on 25^th August 2010. In terms of the agreement the Bank will distribute DSP BlackRock Mutual Fund Schemes through its network of over 3600 Branches spread across the country.

Source: https://www.centralbankofindia.co.in/upload/news/Press_Editors_Press_ReleaseDSP.pdf

CREDIT OFFTAKE IN BANKING SYSTEM STILL LOW, SAYS BHATT

According to Mr. O.P. Bhatt, Chairman, State Bank of India, credit offtake in the banking system is still low and the present rate of 19 to 20 per cent is not enough to increase interest rates.

He said the reason could be that there are other sources of money available to the system rather than from banks.

 He expected the offtake to pick up during the September month with Government's calendar borrowings.

Bhatt said they will go slow on the overseas acquisitions until there is more clarity on the global economy situation. However SBI will continue to open 20 to 30 overseas branches in this fiscal.

To question on the impact of the base rate system on the bank's performance, he said people accepted the system and the bank is comfortable.

Source: http://economictimes.indiatimes.com/news/news-by-industry/banking/finance/banking/Credit-offtake-in-banking-system-still-low-says-Bhatt/articleshow/6457207.cms

RELIEF TO TAX PAYERS IN OFFING: GOVT TO TABLE DTC BILL TOMORROW

The Government will table the much-awaited Direct Taxes Code (DTC) bill in the Lok Sabha tomorrow, that is expected to provide relief to income tax payers, both personal and corporate, though not as much as was proposed earlier in the draft.

The government is quite confident of replacing archaic Income Tax Act with DTC from April one, 2011.

Finance Minister Pranab Mukherjee has said he would announce the slabs for personal income tax while tabling the bill and has refused to share the details before that.

He has only said so far that the exemption limit will be raised from the current Rs 1.6 lakh in a year to Rs two lakh.

However, sources said that as per the bill, approved by the Cabinet on Thursday, income between Rs 2-5 lakh is likely to attract 10 per cent tax; for Rs 5-10 lakh it will be 20 per cent and above Rs 10 lakh, 30 per cent.

Currently income between Rs 1.6-5 lakh attracts 10 per cent tax; between 5-8 lakh, 20 per cent and beyond 8 lakh, 30 per cent.

The proposed tax slabs are much lower than originally proposed in the draft DTC bill -- 10 per cent for Rs 1.6 lakh to Rs 10 lakh, 20 per cent between Rs 10-25 lakh and 30 per cent for income above Rs 30 lakh.

Compared to the current tax slabs, the proposed rates will make tax payers earning Rs 15 lakh a year richer by Rs 41,040.

 
Similarly, tax burden would reduce by Rs 21,540 for those earning between Rs 5 lakh and Rs 10 lakh annually, while those earning between Rs 2-5 lakh could be richer by Rs 7,660, Deloitte Haskins & Sells Partner Neeru Ahuja said.

The tax slabs are proposed to be reduced from the draft stage, because the government is expected to retain income tax exemption on interest on housing loans up to Rs 1.5 lakh a year, under pressure from certain quarters. 

Also, earlier proposals of taxing long term savings like provident funds at the time of withdrawal have been dropped.

DTC aims at reducing tax rates, and cutting exemptions. With the government getting adverse feedback on the proposals to withdraw some exemptions, it will have to calibrate tax rates to save the government kitty.

The DTC bill also proposes to retain corporate tax at 30 per cent, but without surcharge and cess. With them, the current tax liability on corporates comes to over 33 per cent.

Tax experts said this proposal will provide much needed relief to the industry and bring the levy on par with global standards, though the industry wanted it to be reduced to 25 per cent. The government also conceded to the industry demand not to levy minimum alternate tax (MAT) on assets but book profits of the companies. So, it had to dilute earlier proposal of cutting corporate tax to 25 per cent, sources said. 

However, the government raised MAT to 20 per cent from 18 per cent, but it should not make much of a difference since with surcharge and cesses, MAT currently comes to 19.33 per cent.

MAT is tax imposed on profit earning companies that do not fall under the tax net because of various exemptions.

Sources said it is for Parliament to decide whether DTC will be the money bill or ordinary legislation. 

In case, it is money bill, the government is required to pass it in the Lok Sabha only.

As such, the government is confident that the DTC could be enacted from next fiscal.

Source: http://economictimes.indiatimes.com/personal-finance/tax-savers/tax-news/Relief-to-tax-payers-in-offing-Govt-to-table-DTC-bill-tomorrow/articleshow/6455112.cms

PNB LAUNCHES CROSS-BORDER REMITTANCE SOLUTION

Punjab National Bank has launched 'PNB NRI REMIT-India', an online cross-border remittance solution to send money from the US to India.

The bank has launched the online cross-border remittance solution in association with The Bank of New York Mellon, New York.

Besides, the bank also launched RET AD, an online reporting system meant for bank branches authorised to deal in foreign exchange.

An online base system, under this, branches can report their foreign exchange transaction, sale or purchase through the system.

The bank also launched the World Travel Card in association with MasterCard. The PNB World Travel Card has been designed as a pre-paid wallet for persons travelling abroad that can be used outside India.

This card is available in three currencies--Dollar, Euro and Pound. 

Source: http://economictimes.indiatimes.com/news/news-by-industry/banking/finance/banking/PNB-launches-cross-border-remittance-solution/articleshow/6451804.cms

PUNJAB & SIND FILES PAPERS WITH SEBI FOR IPO

Punjab & Sind Bank (PSB) on Friday filed a draft red herring prospectus (DRHP) with SEBI for an initial public offering (IPO).

The IPO is likely to hit the market in end-November or early-December this year, a bank official said.

The bank proposes to offer up to 4 crore equity shares of Rs 10 each for cash at a price to be discovered through a 100 per cent book-building process.

PSB is looking to mop up at least Rs 500 crore through the IPO, which is likely to bring down the Government stake in the bank to 82 per cent. PSB will be the last of the nationalised banks to list its equity on the stock exchanges.

Its equity capital stood at Rs 183 crore. PSB also has a preference capital of Rs 200 crore.

SBI Capital Markets, Enam Securities and ICICI Securities are the book running lead managers for the proposed IPO.

Source: http://www.thehindubusinessline.com/2010/08/28/stories/2010082851070800.htm

IDBI BEST PUBLIC SECTOR BANK FOR SME FINANCING: D&B

IDBI Bank has received the best public sector bank award for financing small and medium enterprises (SMEs) from global business information provider Dun and Bradstreet.

"IDBI Bank has developed a special business model to serve the SMEs in the country that has enabled the bank to develop a quality SME portfolio through a dedicated streamlined credit decision process," said T. R. Bajalia, executive director and head (SME Group), IDBI Bank.

The award was presented to IDBI Bank at the "Dun & Bradstreet - Polaris Software Banking Awards 2010" here.

D&B India developed a proprietary quantitative model based on various parameters for identifying the top banks across the spectrum. The model is based on the twin premise of recognising the size and growth of the banks.

For this purpose, D&B India identified a number of crucial parameters related to business, profitability, network, priority sector lending, asset quality, global business etc relevant to each award category.

The final ranking of the banks was arrived at using a composite score of these weighted parameters. The information has been collated from Reserve Bank of India (RBI) documents and annual reports of the banks.

Source: http://economictimes.indiatimes.com/news/news-by-industry/banking/finance/banking/IDBI-best-public-sector-bank-for-SME-financing-DB/articleshow/6445449.cms

SUNIL MITTAL, GM RAO MAY FIND BERTH IN NEW RBI BOARD

RBI’s central board is set to see a total revamp with a host of members completing their four-year term. Industrialist Sunil Mittal of the Bharti group and GM Rao of GMR are likely to be the new faces in the reconstituted board. According to sources, the two businessmen have been sounded out for their consent for being considered for nomination.

The government had last reconstituted the central bank’s board in June 2006. At that time, Wipro chairman Azim Premji, Aditya Birla Group of Companies chairman Kumar Mangalam Birla, Ambuja Cement chairman Suresh Kumar Neotia and Sanjay Labroo of Asahi Glass were inducted as members in place of Ratan Tata, NR Narayana Murthy and KP Singh, who had retired.

Besides the industrialists, there will be other retirements as well although it is not clear whether any member will be reappointed. In 2006, Chartered Accountant YH Malegam, Supreme Court Advocate HP Ranina and Ashok S Ganguly, member, Investment Commission and Knowledge Commission, were reappointed.

Sources said there is a likelihood that the entire board may change, in which case the central bank will lose some long-standing experts like Mr Malegam, who have outlasted several governors and has been the most active member on the board of the central bank.

The government has the powers to nominate 10 directors on the RBI board as per section 8(1)C of the RBI Act, 1934. According to the RBI Act, the central board shall include the governor and at the most four deputy governors, four directors nominated from RBI local boards, 10 directors nominated by the government and one bureaucrat also to be nominated by the government. Most of the industrialists and experts are nominated by the government under Section 8(1)C of the Act, which provides for the appointment of 10 nominees.

While the board does not have any role in monetary policy, it is the ultimate body that governs the working of RBI. The central bank’s HR policies and employee benefits are determined by the board.

Source: http://economictimes.indiatimes.com/news/news-by-industry/banking/finance/banking/Sunil-Mittal-GM-Rao-may-find-berth-in-new-RBI-board/articleshow/6442863.cms

PSBS WROTE OFF LOANS WORTH RS 10,966 CR IN FY10: FINMIN

The government said public sector banks wrote-off loans worth Rs 10,966 crore from their books of accounts during the 2009-10 financial year.

State Bank of India had written off Rs 1,990 crore worth of loans, while Canara Bank and Punjab National Bank wrote off Rs 884 crore and Rs 853 crore, respectively during the year, Minister of State for Finance Namo Narain Meena said in a written reply to the Lok Sabha.

During 2008-09, the public sector banks had together written off Rs 7,217 crore in loans.

In reply to another question, Meena said to encourage people from the unorganised sector to voluntarily save for their retirement and to lower the cost of operations of the New Pension System (NPS) for such subscribers, the government has approved a 'Swavalamban' scheme in the Budget 2010-11.

Under the scheme, the government will contribute a sum of Rs 1,000 per year to each NPS account opened in the year 2010-11, he said.

This scheme will be available for persons who join the NPS with a minimum contribution of Rs 1,000 and a maximum contribution of Rs 12,000 per annum during the 2010-11 financial year and are not members of any statutory provident fund.

This scheme will be available for another three years and is targeted to benefit about 10 lakh NPS subscribers of the unorganised sector during the year 2010-11, he said.

Source: http://www.business-standard.com/india/news/psbs-wrote-off-loans-worth-rs-10966-cr-in-fy10-finmin/106841/on