"Sunday Special" Government’s Fiscal Deficit in the April-February Period of 2011-12 stood at Rs 4.93 lakh crore

As per the Controller General of Accounts’ (CGA) data released on 30 March 2012, union government’s fiscal deficit during the April-February period of 2011-12 stood at Rs 4.93 lakh crore, or 95% of the revised estimates. At the end of the 11 months ending February, the fiscal deficit was Rs 493571 crore or 94.6% of the target.

During the April-February period of 2010-11, the deficit had stood at 68.6% of the budgeted target. The government in March revised upwards the fiscal deficit target for the 2011-12 fiscal to 5.9% of GDP, from 4.6% projected earlier.


 Rise in fiscal deficit was attributed to high subsidy bill, increasing crude oil prices, low tax collection and poor realisation from sale of government equity in state-owned companies. in the nine months to December 2011, the cover that the foreign exchange reserves provided to the total external debt came down to less than 89%. In this period external debt to GDP ratio increased to 20% vis-à-vis 17.8% at March-end 2011.


India’s total external debt at the end of December 2011 was $335 billion, an increase of $29 billion over $306 billion at March-end 2011. Higher commercial borrowings and short-term trade credit were held responsible for the raise. The share of dollar denominated debt at 57% was the highest in external debt, followed by the rupee 18.6%, Japanese yen 10%, SDR 9% and euro 4%.


 The long-term debt was $257 billion, recording an increase of $15.8 billion over the March-end 2011 level, while short-term debt increased by $13 billion to $ 78 billion. Short-term debt accounted for 23% of India’s total external debt. Long-term debt accounted 77%. In terms of component the share of commercial borrowings stood highest at 30%, followed by NRI deposits 16% and multilateral debt 15%.
Source:jagran josh

"Saturday Special"P-notes to have no tax liability in India, says FM

India's union finance minister Pranab Mukherjee said on Friday that the investors holding participatory notes, or P-notes would not have any tax liability in the country.

He pointed out that the tax authorities in the country would determine the tax that the financial institutional investors (FIIs) are liable to pay in the country. They will not find out any additional information about the holders of participatory notes. Thus there will be no tax liability for such holders under the Indian laws.

Mukherjee has proposed the GAAR as part of the union budget presented on March 16 for the year starting on April 1, 2012. The GAAR is aimed at avoid the aggressive tax avoidance schemes that exploit the liberal tax laws in investments between countries like India and Mauritius.

He explicitly said that GAAR will not hurt honest taxpayers in the country and the government will not punish genuine foreign investors who invest in domestic shares through participatory notes.

Foreign portfolio investors that are registered with the Indian market regulator issue p-notes. They can also be issued by their sub-accounts for foreign investors, who often invest in thescheme anonymously. These p-notes often avoid paying taxes in India but the introduction of GAAR would impact the investments in the instruments due to introduction of taxes.

The experts had warned that the introducing taxation for Participatory notes would shut down the avenue for investments to flow into the country.
Source:topnews.in

"Finance World" Mallya might sell stake in UB to Heineken

Indianbillionairebusinessman, Vijay Mallya might be planning to cell part of his stake in United Breweries, the flagship business unit of the UB group, to Dutch brewery giant Heineken in order to raise money to help the troubled Kingfisher Airlines.

According to a media report citing people closer to the matter, Mallya might sell 13 per cent of United Breweries, which is worth about $370 million, to Heineken. The stake could pass the ownership of United Breweries to Heineken as it already owns 37.38 per cent in the country's largest beverages group.

Mallya has a 19 per cent in United Breweries and might be planning to sell some of the stake to infuse capital in the troubled Kingfisher Airlines. According to estimates, Kingfisher has a total debt of about Rs 7,000 crore and accumulated losses of about Rs 6,000 crores.

The country's civil aviation ministry has said that it will determine its actions on whether to allow the airline to continue on the basis of a performance report released by DGCA. The DGCA is likely to call Vijay Mallya to know what are his plans for the troubled airline. The airline will be allowed to operate as long as it is able to keep its passengers safe and followschedule.

Both UB Group and Heineken did not comment on the matter.

Source:topnews.in

"Finance World" Gayatri Projects raises Rs 144 crore via rights issue

Gayatri Projects , a construction and infrastructure company, has raised Rs 144 crore through a rights issue of shares at Rs 120 each.

After the rights issue, the founder's stake in the company rose to 63.47% from 55%, the company said.


Source:moneycontrol

"Finance World" Vijay Mallya may sell between 12-13% stake in UBL

Liquor baron and chairman of UB Group Vijay Mallya could be looking to offload 12-13% of his stake inUnited Breweries (UBL). Sources say Mallya and Heineken are in final stages of negotiations.

Heineken may look to acquire controlling stake. The deal could be valued around Rs 1,700 crores

Mallya and Heineken could be working on an agreement on UBL stake sale. An announcement is expected shortly.

Currently, Heineken holds 37.5% stake in UBL and Mallya holds 23% stake in personal capacity. United Spirits Ltd (USL) and UB Holdings together own 14.71% stake in UBL. The balance is with the public.

Mallya stake sale will allow Heineken stake to go beyond 50%. Mallya will garner between USD 400-500 million, Rs 2,500 crore for 12-13% stake. The transaction will give control premium of Rs 800 crore to Mallya.

Meanwhile, sources indicated that USL and UB Holdings are unlikely to sell their stake.

When contacted, UB Group and Heineken refused to comment, saying they do not talk publicly about rumour and speculation.

Source:money control

"Financial World" Key points of RBI's new guidelines for gold loan NBFCs

The Reserve Bank of India issued new fair practice guidelines for the MFI and gold loan NBFCs (Non-banking finance companies) under which these companies will have to ensure that adequate due diligence is carried out On customers.

According to the new rules, prior notice has to sent out to gold loan borrowers if non-payment of loans compel NBFCs to auction jewellery kept as collateral. The NBFCs will have to announce the auction via advertisement placed on at least two newspapers and they cannot particpate in such auctions.

In addition, pledged gold will have to be auctioned only via board-approved auctioneers and the loan agreement shall also disclose auction procedure details.

The guidelines further states that jewellery taken as collateral needs to be appropriately insured and the NBFCs must ensure an adequate system for storing them in safe custody.

Below are the key points of the guidelines

• Code in vernacular language to be displayed by an NBFC-MFI in its office and branch premises
• Field staff to make necessary enquiries with regard to existing debt of the borrowers
• Effective rate of interest charged, grievance redressal system should be prominently displayed
• Due diligence shall be carried out to ensure the repayment capacity of the borrowers
• All sanctioning and disbursement of loans should be done only at a central location
• More than one individual should be involved
• Loan agreement be detailed and contain all necessary conditions
• The borrower cannot be a member of more than one SHG / JLG
• Non-coercive methods of recovery
• Field staff shall be allowed to make recovery at residence only if borrower fails to appear at central designated place on 2 or more occasion.

Source:moneycontrol

" Saturday Special"RBI to compensate banks

India's central bank, the Reserve Bank of India has said that it will compensate 100 per cent revenue loss to banks for five years to encourage financial inclusion in the North-East region in the country.

 RBI Deputy General Manger T Jamang said that under the plans, a banking facility should be available in each village or cluster of nearby villages that has a population of 2,000 by March 2012.

 "RBI will compensate 100 per cent revenue loss to banks for five years as an incentive to push financial inclusion in the region," Jamang said. He was speaking on the sidelines of an annual payment conference of the central bank. Jamang also said that the compensation will also be extended to specific areas in which the population is more than 1,000 and more.

He also said that the central bank is aiming at including people in the banking system by connecting villages with a banking correspondent and mobile individuals. RBI is also working to improve e-banking penetration in the region in order to allow easy access to banking services to the people.

The central bank wants to offer mobile-banking facilities so that baking facilities can be accessed on mobile devices instead of banks.
Source:topnews.in