Brokers move HC on directive to collect STT on physical deliveries of derivatives
Stock brokers have moved the Bombay High Court against market regulator Sebi and the National Stock Exchange for holding brokers responsible for collecting securities transaction tax (STT) on physical delivery of derivatives. NSE said in a circular that brokers were responsible for any additional STT that may become payable pursuant to any clarification by CBDT in the future. Brokers accused NSE and SEBI of launching a product without clarity on the taxation part. The Association of National Exchange Members of India (ANMI), which filed the writ petition in the Bombay High Court on Monday, said there was ambiguity regarding the rate of STT to be levied on the physical settlement of stock derivatives. The case will come up for hearing on August 13.
Government may clip wings of willful defaulters soon
India may stop willful defaulters with loans exceeding Rs 50 crore from travelling overseas without prior approval as part of a crackdown on promoters looking to leave the country without meeting repayment obligations. The recommendation has been made by a committee headed by financial services secretary Rajiv Kumar that was formed to suggest ways of preventing this from happening. “It was recommended that Section 10 of the Indian Passport Act may be amended to provide that persons who are in willful default of loans above a specified limit of debt may be treated as financial and economic risk in public interest,” said a government official, adding that the specified limit may be set at 50 crores.
RBI cancels licences of 368 NBFCs in first half of 2018
The Reserve Bank of India (RBI) has cancelled licences of 368 non-banking financial companies (NBFCs) in the six months ended June, more than double the number of such cancellations in the whole of 2017, for failing to meet regulatory norms. The move is being seen as an attempt to clean up the sector, which has more than 11,402 entities, of which 222 are non-deposit taking NBFCs. Industry experts say a majority of the licences belong to NBFCs, which had failed to meet RBI’s requirement of net owned fund of 2 crore. In fact, some NBFCs had surrendered their certificates of registration. According to the amendment in the RBI Act of 1997, the central bank had mandated the minimum capital requirement for NBFCs at 25 lakhs. The requirement was increased to 2 crores for new NBFCs.
Cyrus Mistry asks NCLAT to stay Tata Sons status change
Former Tata Sons’ chairman Cyrus Mistry on Tuesday urged the National Company Law Appellate Tribunal (NCLAT) to stay the proposed conversion of Tata Sons to a private limited company from its present status as a public limited one. Appearing on behalf of Cyrus Investments, senior counsel C A Sundaram said the Tatas have approached the registrar of companies and were awaiting a response. Asking for an interim order to halt the process, Sundaram said the proposed move was essentially fraudulent in nature and not in the interest of minority shareholders. The two-member NCLAT bench, headed by Justice S J Mukhopadhaya, however, refrained from granting any interim stay and said it ‘cannot pass any order without listening to the other party’.
IMF warns India over public sector banks, advocates privatization
The International Monetary Fund (IMF) has cautioned India against macro-financial risks which emerged from the government ownership of the public sector banks and suggested to the country that it should consider privatization of these lenders. In its review of India under Article IV, IMF also flagged external vulnerabilities on rising import bill, particularly from increasing oil prices and global protectionist measures. The review done by executive directors of IMF said systemic macro-financial risks persist, as the weak credit cycle could impair growth and the sovereign-bank nexus has created vulnerabilities. IMF underscored the importance of a comprehensive plan to improve the governance, internal controls, and operations of public sector banks, including by considering more rapid withdrawal of public ownership.
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