Thursday, August 2, 2007
India''s Main Index Provisionally Falls 4.1%
India''s benchmark share index provisionally ended down 4.08 percent on Wednesday, caught in a sell-off in global equity markets as worries about a credit crunch intensified.The 30-share index provisionally lost 635.22 points to 14,915.77, with banks leading the fall.The broader 50-share index fell 4.11 percent to 4,342.90.
Chidambaram For Lower Deposit Rates
It is none other than the Finance Minister who is now advising banks to lower deposit rates. He even indicated how much a one-year term deposit should fetch.The finance minister feels that with inflation coming down and banks sitting on surplus liquidity banks should be able to nudge their rates down. 8.5 % for deposits should be the ideal level, said Union Finance Minister P Chidambaram.
According to bankers Finance Minister wants the benefit of lower deposit rates to be passed on to borrowers. If high liquidity situation continues to prevail bankers are expecting deposit rates to come down by another half to one per cent.The Finance Minister has said benefit should be passed on to. I expect deposit rates to fall further in the next one month, said SK Goel, CMD, UCO Bank.
After the CRR hike banks are in no mood to cut lending rates. In fact to maintain their margins banks are bringing down deposit rates and holding on to their lending rates.
Once banks are comfortable with the margins only then would they be open to review loan rates. Home loan rates are rock bottom right now, most of my lending is sub-prime lending rate, no question of cutting lending rates, said PP Mallya, CMD, Vijaya Bank.
So while depositors brace themselves for deposit rate cuts they as borrowers are the losers. And while the finance minister has meant well in suggesting banks to refrain from high deposit rates so that there is a chance for lending rates to soften bankers are not listening.
According to bankers Finance Minister wants the benefit of lower deposit rates to be passed on to borrowers. If high liquidity situation continues to prevail bankers are expecting deposit rates to come down by another half to one per cent.The Finance Minister has said benefit should be passed on to. I expect deposit rates to fall further in the next one month, said SK Goel, CMD, UCO Bank.
After the CRR hike banks are in no mood to cut lending rates. In fact to maintain their margins banks are bringing down deposit rates and holding on to their lending rates.
Once banks are comfortable with the margins only then would they be open to review loan rates. Home loan rates are rock bottom right now, most of my lending is sub-prime lending rate, no question of cutting lending rates, said PP Mallya, CMD, Vijaya Bank.
So while depositors brace themselves for deposit rate cuts they as borrowers are the losers. And while the finance minister has meant well in suggesting banks to refrain from high deposit rates so that there is a chance for lending rates to soften bankers are not listening.
Indian Manufacturing Growth 28-Mth Low In July - PMI
Indian manufacturing activity fell in July to its lowest level in 28 months, weighed down by a slower pace of output and export growth as a series of recent monetary tightening measures worked through the economy.The ABN Amro Bank purchasing managers'' index (PMI) fell to a seasonally adjusted 52.9 in July from 53.2 in June. It was the lowest reading since the series began in April 2005.
The PMI, compiled by UK-based NTC research and sponsored by the Dutch Bank, tracks changes in manufacturing business conditions by polling 500 companies each month on output, new orders, employment and prices.A reading above 50.0 signals expansion while readings below 50.0 suggests contraction.Slowdown in the manufacturing sector is becoming more pronounced now and the PMI falling to its lowest level in 28 months corroborates that, Gaurav Kapur, senior economist at ABN Amro in India said.
The PMI hit a peak of 59.3 in October 2006. It has been declining since then as the central bank took a raft of monetary steps to cool price pressures in Asia''s third-biggest economy.
The new orders index eased to 55.7 in July from 55.8 in June. The new export orders index fell to a three-month low of 51.3.
The output index fell to 54.2 in July, a four-month low.
This suggests that both domestic as well as export demand is moderating, Kapur said.
The central bank has raised its key lending rate five times since June 2006, and jacked up banks'' cash reserve ratio four times since December.
The PMI, compiled by UK-based NTC research and sponsored by the Dutch Bank, tracks changes in manufacturing business conditions by polling 500 companies each month on output, new orders, employment and prices.A reading above 50.0 signals expansion while readings below 50.0 suggests contraction.Slowdown in the manufacturing sector is becoming more pronounced now and the PMI falling to its lowest level in 28 months corroborates that, Gaurav Kapur, senior economist at ABN Amro in India said.
The PMI hit a peak of 59.3 in October 2006. It has been declining since then as the central bank took a raft of monetary steps to cool price pressures in Asia''s third-biggest economy.
The new orders index eased to 55.7 in July from 55.8 in June. The new export orders index fell to a three-month low of 51.3.
The output index fell to 54.2 in July, a four-month low.
This suggests that both domestic as well as export demand is moderating, Kapur said.
The central bank has raised its key lending rate five times since June 2006, and jacked up banks'' cash reserve ratio four times since December.
Wednesday, August 1, 2007
Taxpayers Can File Return Till March 31
Taxpayers, who have failed to submit tax returns before the deadline of July 31, can still file returns till March 31, 2008 without fearing the levy of penalty.In Bihar, however, the CBDT has extended the last date of filing of income tax returns in Bihar till August 16, in view of the disruption caused by floods in the state.
Under the provisions of Income Tax Act, taxpayers, who have already paid all due taxes, can still submit their tax returns till March 31, 2008 and no penalty will be imposed on them, a senior official of the Central Board of Direct Taxes said.Around 3.90 crore taxpayers are expected to submit returns this year. Taxpayers, who had to pay up to Rs 5,000 income tax for 2006-07, will have to pay one per cent interest on the outstanding amount for the period between July 31 and the date they pay the dues, said official.
Under Section 234 (A) of the Income Tax, income tax assessees will have to pay penal interest of one per cent for every month, till they paid the taxes and submit the returns, he said.
However, if the tax liability was more than Rs 5,000 and they had to deposit quarterly advance taxes as well, such taxpayers will have to pay interest on the outstanding amount for every quarter as well.The official said those who want to submit revised tax returns because of non-reporting of some tax liability or misrepresentation of facts can also submit revised returns till March 31, 2009 by paying due taxes voluntarily.If any assessee fails to submit returns till March 31, 2008, the department can impose a penalty of Rs 5,000 and order scrutiny of previous returns as well.
Under the provisions of Income Tax Act, taxpayers, who have already paid all due taxes, can still submit their tax returns till March 31, 2008 and no penalty will be imposed on them, a senior official of the Central Board of Direct Taxes said.Around 3.90 crore taxpayers are expected to submit returns this year. Taxpayers, who had to pay up to Rs 5,000 income tax for 2006-07, will have to pay one per cent interest on the outstanding amount for the period between July 31 and the date they pay the dues, said official.
Under Section 234 (A) of the Income Tax, income tax assessees will have to pay penal interest of one per cent for every month, till they paid the taxes and submit the returns, he said.
However, if the tax liability was more than Rs 5,000 and they had to deposit quarterly advance taxes as well, such taxpayers will have to pay interest on the outstanding amount for every quarter as well.The official said those who want to submit revised tax returns because of non-reporting of some tax liability or misrepresentation of facts can also submit revised returns till March 31, 2009 by paying due taxes voluntarily.If any assessee fails to submit returns till March 31, 2008, the department can impose a penalty of Rs 5,000 and order scrutiny of previous returns as well.
Chidambaram Likely To Ask Banks To Improve Online Tax Data
The Finance Minister, Mr P Chidambaram, may ask public sector banks to significantly improve the data quality in online tax accounting system (OLTAS) and e-TDS returns to enable tax credits based on electronic PAN ledger accounts. Data quality issues in OLTAS and e-TDS returns form part of the agenda of the meeting that the Finance Minister will hold with Chief executives of PSBs on August 1. Agency banks are required to transmit complete and correct tax payment data online. Moreover, as deductors the TDS returns filed by banks constitute a large segment of deductees.
An analysis of OLTAS and e-TDS data from banks pertaining to financial year 2006-07 show that there is high level of mismatch in challan identification number (CIN) in OLTAS and TDS return, errors in reporting of unique identification number of the taxpayer (PAN and TAN) in the corresponding instrument (challan) through which payment is effected and poor percentage in quoting PAN of the deductees in TDS returns filed by the banks.
An analysis of OLTAS and e-TDS data from banks pertaining to financial year 2006-07 show that there is high level of mismatch in challan identification number (CIN) in OLTAS and TDS return, errors in reporting of unique identification number of the taxpayer (PAN and TAN) in the corresponding instrument (challan) through which payment is effected and poor percentage in quoting PAN of the deductees in TDS returns filed by the banks.
Interest Rates Likely To Remain Untouched Despite CRR Hike
Banks'' lending rates will remain largely untouched by the Reserve Bank of India''s (RBI''s) decision today to hike the cash reserve ratio (CRR). Conversely, banks are likely to stop giving short-term loans at discounted rates with part of the liquidity being withdrawn by the RBI in its first-quarter review of the 2007-08 monetary policy. Banks also began partially correcting peak rates offered on one-year deposits after the RBI kept reverse repo and repo rates unchanged for the second time.
Canara Bank, Bank of Baroda and Bank of India announced an interest rate reduction on their special one-year deposit schemes by 50 basis points to 9 per cent today. The increase in CRR, the cash balances banks are required to keep with the central bank, by 50 basis points to 7 per cent from August 4 will drain Rs 16,000 crore. Unlike earlier occasions, the current CRR hike did not trigger lending rate increases as banks will be flush with liquidity even after the outflow. This is the fourth identical increase in CRR since December 2006 and it absorbs only a part of the excess liquidity.
The RBI also removed a Rs 3,000-crore limit, imposed in March, on the amount it absorbs through reverse repo auctions. Reverse repo is an instrument by which the central bank absorbs money from banks against government securities normally for a day. This measure is expected to lift the overnight call money rates from the sub-1 per cent levels prevailing for over two months. The limit had spurred banks with spare cash to lend more in the money market.
Canara Bank, Bank of Baroda and Bank of India announced an interest rate reduction on their special one-year deposit schemes by 50 basis points to 9 per cent today. The increase in CRR, the cash balances banks are required to keep with the central bank, by 50 basis points to 7 per cent from August 4 will drain Rs 16,000 crore. Unlike earlier occasions, the current CRR hike did not trigger lending rate increases as banks will be flush with liquidity even after the outflow. This is the fourth identical increase in CRR since December 2006 and it absorbs only a part of the excess liquidity.
The RBI also removed a Rs 3,000-crore limit, imposed in March, on the amount it absorbs through reverse repo auctions. Reverse repo is an instrument by which the central bank absorbs money from banks against government securities normally for a day. This measure is expected to lift the overnight call money rates from the sub-1 per cent levels prevailing for over two months. The limit had spurred banks with spare cash to lend more in the money market.
PM Reviews Growth Of Farm Sector In AP
Prime Minister Manmohan Singh on July 31 kicked off the process of creating the road map for achieving the dual goals - related to food security as well as the urgent need to make farming a viable proposition, beginning with Andhra Pradesh. Chairing the first-ever joint review of problems related to agriculture and allied sector in Andhra, the Prime Minister called for bridging inter-regional gaps in crop yields, timely completion of irrigation projects, efficient water management, and special focus on rainfed areas, which would account for 40 per cent of the total farm land after the completion of all the projects in the state. In a suggestion to the vexed problem of poor access to institutional credit in the agriculture sector, Singh told chief minister YS Rajasekhara Reddy to bring the entire farming community in the state under the ongoing financial inclusion programme by working closely with the Reserve Bank of India. Union Agriculture Minister Sharad Pawar raised his concern stating that despite the increase in volume of credit flow, the number of farm loan accounts availing of credit was coming down significantly.
While the number of such loan accounts at the national level declined to 39.7 million in the year 2006-07 from 41.3 million in 2004-05, in Andhra this number was down to 4.8 million from 6.8 million during the same period. This indicates that a large number of farmers are turning defaulters and are consequently denied access to institutional credit. A significant outcome of today''s meet was that the state government has agreed to work on specific measures that need to be implemented in the agriculture sector for increasing the output through a resolution. This also includes the state''s targets under the food security mission being launched by the Centre.
While the number of such loan accounts at the national level declined to 39.7 million in the year 2006-07 from 41.3 million in 2004-05, in Andhra this number was down to 4.8 million from 6.8 million during the same period. This indicates that a large number of farmers are turning defaulters and are consequently denied access to institutional credit. A significant outcome of today''s meet was that the state government has agreed to work on specific measures that need to be implemented in the agriculture sector for increasing the output through a resolution. This also includes the state''s targets under the food security mission being launched by the Centre.
Four Agro Food Parks To Come Up In AP
Yes Bank and Alterra of Wageningen University Research Centre, Netherlands, have inked pact with Indu Projects Limited, Hyderabad-based infrastructure company, for the setting up of four integrated agro food parks in Andhra Pradesh. The cost of the project, excluding the investment in land, is estimated at Rs 1,000 crore.
Indu Projects, which will provide the initial investment, will be the project developer and also a strategic partner in the operations of the parks. Yes Bank will bring in other equity and technology partners while Alterra will extend its international expertise and technical support. The locations of the agro parks are yet to be finalised, though they have been conceived to be set up near urban centres. Key infrastructural components of the agro parks include a central processing unit for food production and processing, warehousing, cold storage, trade facilitation centre, agro tourism services and a quality testing lab.
Indu Projects, which will provide the initial investment, will be the project developer and also a strategic partner in the operations of the parks. Yes Bank will bring in other equity and technology partners while Alterra will extend its international expertise and technical support. The locations of the agro parks are yet to be finalised, though they have been conceived to be set up near urban centres. Key infrastructural components of the agro parks include a central processing unit for food production and processing, warehousing, cold storage, trade facilitation centre, agro tourism services and a quality testing lab.
Tuesday, July 31, 2007
Time To Look Beyond 9% Growth: FM
At a time when Mahindras are in the race for Landrover and Jaguar and pharmaceutical majors like Dr Reddy''s Laboratories and Ranbaxy are targeting buyouts in Europe Union Finance Minister has encouraging words for them.The Mahindras, the Birlas, the L&Ts, the Reddys, all of you award winners today, must go out and buy businesses the world over, said Union Finance Minister P Chidambaram at NDTV Profit annual Business Leadership Awards.
Chidambaram also promised India Inc of cheaper funding and government backing on acquisitions going beyond the 9 per cent growth of GDP.Citing the example of Tata Corus deal Finance Minister said scale is only possible by inorganic growth. We must look to beyond 9 per cent. And how do we do that? We do that by building global businesses, Chidambaram said.If any of you thinks that he can build a global business through the organic way, I am sorry to disappoint you-you are wrong, he added.
According to ICICI''s Global Investment Outlook report, the total equity deals struck by Indian companies have crossed $50 billion in 2007 while in the same timeframe last year the equity deals stood at $13.5 billion.Finance Minister has certainly given India''s business barons both big and small plenty of food for thought. And it is also likely that we now see a fresh impetus to possible global takeover deals by corporate India.
Chidambaram also promised India Inc of cheaper funding and government backing on acquisitions going beyond the 9 per cent growth of GDP.Citing the example of Tata Corus deal Finance Minister said scale is only possible by inorganic growth. We must look to beyond 9 per cent. And how do we do that? We do that by building global businesses, Chidambaram said.If any of you thinks that he can build a global business through the organic way, I am sorry to disappoint you-you are wrong, he added.
According to ICICI''s Global Investment Outlook report, the total equity deals struck by Indian companies have crossed $50 billion in 2007 while in the same timeframe last year the equity deals stood at $13.5 billion.Finance Minister has certainly given India''s business barons both big and small plenty of food for thought. And it is also likely that we now see a fresh impetus to possible global takeover deals by corporate India.
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