FRDI Bill: Centre offers to set a new cap on deposit cover
Reflecting a change of mind, the Centre has conveyed to a joint committee of Parliament deliberating on the Financial Resolution and Deposit Insurance Bill that it is ready to amend the legislation to “specifically state” an upper limit for deposit insurance. On Monday, the committee on the FRDI Bill, headed by senior BJP leader Bhupender Yadav, discussed the government’s fresh stance with RBI Governor Urjit Patel. The Governor, however, favours the existing provision, where the deposit insurance is capped at Rs. 1 lakh.
NPA levels of banks set to bloat with RBI’s mega resolution framework
Over Rs 2.8 trillion worth of loans, where payments have remained outstanding for 60-90 days, carry the risk of slipping into the category of non-performing assets (NPAs) due to the revised framework for stressed loans. Besides pushing up the tally of gross NPAs, this may add to the pressure on banks to make enhanced provisions. In banking parlance, accounts that have remained unpaid for 60-90 days are termed Special Mentioned Account (SMA2). While the risk of slippage remains high, not all of them will, however, become NPAs.
Mutual funds see little change in inflows post-LTCGtax regime
The mutual fund’s industry has not seen any reduction in inflows after the proposal to impose long-term capital gains tax (LTCG) and dividend distribution tax (DDT). The Finance Minister, in his Budget speech, had proposed a tax on long-term capital gains exceeding Rs 1 lakh at a rate of 10 per cent without allowing the benefit of indexation. All gains up to January 31, 2018 would be grandfathered. The Finance Minister had also proposed introduction of a tax on distributed income on equity-oriented mutual funds at a rate of 10 per cent.
Rs 2 lakh crore loans may head to bankruptcy court
More than Rs 2 lakh crore worth of stressed loans may be headed to bankruptcy court after the RBI dumped various restructuring schemes on Monday and pronounced the bankruptcy courts as the final arbiter of a defaulting company’s future. These loans are mostly from infrastructure sectors such as power, telecom, roads and ports and are in different stages of restructuring under plans such as strategic debt restructuring (SDR) or the so-called sustainable structuring of stressed assets (S4A). Months after being admitted to these programmes, banks and companies are yet to find a blueprint for resolution.
HUL to cut online ads if toxic content not weeded out
Hindustan Unilever (HULBSE), India’s largest advertiser, will reduce its spends on online and social media platforms such as Google and Facebook if they don’t filter out content which is divisive or promotes gender stereotypes and hatred, in line with its Dutch parent Unilever’s new global policy. Unilever, which spent $9.4 billion on marketing globally last year, of which one-third was on digital advertising, on Monday said it will not advertise its brands on social media alongside content that creates divisions, exploits children and hurts religious sentiments. “The global commitment will be applicable to HUL.
Now, ICAI to look into Fortis issue
Close on the heels of markets regulator SEBI reportedly commencing a preliminary inquiry into the alleged fund diversion and corporate governance lapses at Fortis Healthcare, CA regulator ICAI has said it is also considering looking into the matter from the angle of misconduct by chartered accountants. ICAI said it had asked the government to ensure that it had the required powers to penalize audit firms found guilty of professional misconduct, and not just individual CAs. Besides, the CA regulator said it would soon be setting up an additional bench of its Disciplinary Committee to fast-track proceedings and reduce pendency.
SBI seeks to act tough on Videocon Industries
State Bank of India (SBI) is seeking direction from the Insolvency and Bankruptcy Board of India (IBBI) on whether it needs to file separate insolvency cases against affiliates of Videocon Industries Ltd, given that they are jointly liable for loan repayments. Last month, the country’s largest lender had filed separate insolvency proceedings against two group companies, Videocon Industries and Videocon Telecommunications Ltd, but the National Company Law Tribunal (NCLT) is yet to admit these petitions. They were both parts of the second list of big corporate defaulters put out by the Reserve Bank of India (RBI).
Banks’ woes could mean more business for NBFCs
The continued run of bank asset slippages promises NBFCs an extended Indian summer. With a mounting pile of bad loans pushing further back into the horizon the prospects of a sustained banking recovery, NBFCs could be in for a long run of limited competition — and better business — at the expense of undercapitalised state-owned lenders. NBFC business would likely benefit from the Reserve Bank of India’s (RBI) norms to make default resolutions time bound.
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