News Update, February 13th, 2018

RBI withdraws SDR, S4A, sets banks 180-day timeline for bad loan resolution

The Reserve Bank of India (RBI) on Monday tightened norms for bad loan resolution by setting timelines for resolving large NPAs, failing which banks will have to mandatory refer them for insolvency proceedings. It also withdrew existing debt restructuring schemes such as SDR and S4A. RBI has issued definitions of different resolution plans and an indicative list of financial difficultly, and directed lenders to share data on certain defaulted borrowers with the central bank’s database on large exposures on every Friday.

Source: LiveMint

Banks rue non-inclusion of guarantor norms under IBC

It may seem odd why not all banks are invoking personal guarantees of defaulting promoters. The reason lies in the absence of a notification on bankruptcy law provisions related to individuals, partnerships and guarantors of corporate debtors. This has become a worry for banks looking to invoke personal guarantees of promoters, bankers and legal experts told FE.

Source: Financial Express

20 percent cross-subsidy cap: Industrial power cost to reduce by 14-20 percent

The power ministry’s plan to cap cross-subsidy — additional tariffs paid by industrial and commercial consumers to subsidise households and farmers — at 20%, effective January 2019, could reduce the cost of electricity for businesses by up to 14-20%. At a time when raw material costs are high and pricing power is subdued, this could help companies increase earnings. Among the states, Tamil Nadu keeps the cross-subsidy at the highest level of 60%, while in Uttar Pradesh it is around 40%, one of the lowest.

Source: Financial Express

Shell cos crackdown: Govt removes exemptions for ITR filing

Seeking to crackdown on shell companies, the government has proposed to remove exemption available to firms with tax liability of up to Rs 3,000 from filing I-T returns beginning next fiscal. The Union Budget 2018-19 has rationalized the I-T Act provision relating to prosecution for failure to furnish returns. Thus, a managing director or a director in charge of the company during a particular financial year could be liable for prosecution in case of any lapse in filing I-T returns for any financial year beginning April 1.

Source: Economic Times

Investors in firms undergoing M&As may stare at higher LTCG tax outgo

Investors in companies undergoing mergers, demergers or consolidation may be staring at a higher tax outgo as they may not be able to take advantage of the grandfathering benefit in the long-term capital gains (LTCG) tax. Cost step-up, or grandfathering, applies to listed shares held on January 31, 2018. The tax computation compares the original cost, along with the stock value on January 31, and grants benefit of the higher of the two.

Source: Business Standard

Sebi begins probing Fortis Healthcare over fund diversion claims

India’s markets regulator has started a preliminary examination of the issues at hospital operator Fortis Healthcare Pvt. Ltd, including alleged instances of fund diversions, two people with direct knowledge of the matter said. The Securities and Exchange Board of India, or Sebi, has written to the company seeking explanations on fund transfers to firms related to the promoters and the delay in releasing its fiscal-second quarter earnings, the two people, including a regulatory official, said on condition of anonymity.

Source: LiveMint

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