Top News of the Week
Key features of Companies Bill 2012
Spending of funds by companies for Corporate Social
Responsibility (CSR) will be mandatory. Companies
are required to spend at least 2 % of their net profit on
CSR. The companies will also have to give preference
to the local areas of their operation.
If the companies are unable to meet CSR norms, they
will have to give explanations and may even face penalty.
The amended legislation will help to control major
source of corporate law-breaking for falsely inducing a
person to enter into any agreement with bank or financial institution with a view to get credit facilities.
With view of interests of employees, company will have
to pay 2 years’ salary to employees in case it shuts
The appointment of auditors for five years shall be subject to ratification by members at every annual general
The limit in respect of maximum number of companies
in which a person may be appointed as auditor has
been proposed as 20.
The maximum number of directors in a private company has been increased from 12 to 15 and which can be
increased further by special resolution.
The financial year of any company can end only on
March 31 and the only exception is for companies
which are holding subsidiary of a foreign entity requiring consolidation outside India.
It makes auditors subject to criminal liability if they consciously or carelessly omit certain information from
It has a stipulation that keeps a check on very expensive remunerations for the board of directors and other
executives of the companies. This will protect the interest of shareholders as well as employees.
The amended legislation also limits the number of companies an auditor can serve to 20 besides bringing
more clarity on criminal liability of auditors.
The proposed legislation would ensure setting up of
special courts for speedy trial and stronger steps for
transparent corporate governance practices and curb
CAD Jitters: Customs duty on gold, platinum and
silver raised to 10%
The government on Tuesday increased Customs
duty on gold, platinum and silver to 10 per cent, in
a move aimed at curbing the imports of these precious metals to limit its current account deficit
(CAD) for 2013-14 at the targeted level of 3.7 per
cent of gross domestic product.
The duty hike — estimated to bring an additional
rupees 48.30 billion to the exchequer — however,
was criticized by jewelers, who said the move
might lead to a rise in gold smuggling and raise
the yellow metal’s price by rupees 600 per 10
The move came a day after Finance Minister P
Chidambaram told Parliament the government
would restrict CAD at $70 billion in 2013-14, compared with $88.2 billion the previous year, by
curbing imports of gold, silver, oil and nonessential goods.
RBI to auction Cash Management Bills (CMBs) to
Taking further measures to control the liquidity in
order to boost the position of rupee which has
been on a decline for past some time, the RBI
has decided to auction short-term Cash Management Bills (CMBs) for an amount of rupees 220
billions every Monday.
RBI will be selling Rs.110 billion each in two
CMBs maturing in 35 and 34 days on Monday
and Tuesday, respectively. The bills will mature
on 17 September, 2013, when banking system
liquidity gets strained on account of advance tax
The auctions will be conducted using “Multiple
Price Auction” method and the Cash Management Bills will have the generic character of
CMBs are short-term paper with the flexibility of
fixing tenure according to the requirement of the
government. The basic difference between a
treasury bill and a CMB is that the former has
fixed tenure of 30, 91, 182 and 364 days, while a
CMB can be anything between seven days and
CMBs can be structured in such a way that they
are redeemed at that time to infuse liquidity but
treasury bills do not offer that flexibility.
Top News of the Week
India’s Forex reserves dips by $2.99 billion
As per the Reserve Bank of India, the country’s foreign
exchange reserves lowered by an immense USD 2.995
billion to USD 277.167 billion. Foreign currency assets
which are a major component of the forex reserves,
dropped USD 2.155 billion to USD 249.895 billion in
the first weekend of August 2013.
Foreign currency assets expressed in US dollar terms
include the effect of appreciation or depreciation of the
non-US currencies, such as euro, pound and yen, held
in the reserves.
The gold reserves dropped USD 808.5 million at USD
20.747 billion. The Special Drawing Rights (SDRs)
were down by USD 21.4 million to USD 4.352 billion,
while the country’s reserve position with the IMF also
fell by USD 10.7 million to USD 2.171 billion.
IRDA relaxes investment norms
Insurance Regulatory and Development Authority
(IRDA) relaxes investment norms for firms like Housing
finance to allow them to get higher funding from the
The single investee debt exposure limits in housing
finance companies have been enhanced to 20% of equity plus free reserves from existing 10% limit. The limit
mentioned above can be further increased by an additional 5% with the prior approval of board of company.
The US government has filed two civil lawsuits
against Bank of America that accuse the bank of
investor fraud in its sale of $850 million of residential mortgage-backed securities.
Bank of America made misleading statements and
failed to disclose important facts about the mortgages underlying a securitisation named BOAMS 2008A. More than 40 per cent of the 1,191 mortgages in
the securitisation did not comply with the bank's
underwriting standards, according to the complaint.
Europe recovers from its longest recession,
stocks rise for the third straight week
Eurozone posted a 0.3% growth in the second
quarter of 2013, thus marking the end of the longest
recession in 40 years.
European stocks advance for the third straight
week. This growth was driven by Germany and
France, with growth rate of 0.7% an 0.5 % respectively.
However, unemployment rate stood at a huge figure of 12.1 %. Despite the apparent recovery, the
Netherlands, Spain and Italy were still in contraction
in the second quarter.
The group and promoter group exposure norms will
continue to apply on the investments made in a housing finance company.
India’s Current Account Deficit
has increased sharply
US Government says Bank Of America lied
to investors about mortgage-bond risks
It reached 4.8% of gross domestic product in the last
fiscal year. Moreover the sharp depreciation of the
rupee and the central banks interventions in the foreign
exchange market to stabilize the rupee could deplete
the reserves, reducing the import cover and the cushion for the economy. This is raising worries that it may
be headed toward a repeat of the 1991 crisis.
Mr Manmohan Singh countered this by saying that India now has greater foreign exchange reserve, and the
aim is to only curtail the currency volatility and not to
target the specific currency value. He also said that the
increase in current account deficit is due to the import
of gold. To keep this in check the import tax and lending rate to import gold have been increased to reduce
Greek to need extra aid by early 2014, sets
Greece will need additional rescue loans from its
European partners by the start of 2014, as per Germany’s Central bank, the Bundesbank. Greece has
received 240 billion Euros from IMF/EU as aid in
the last few years.
Greece’s unemployment rate rises to a new high of
Currently in its sixth year of recession, nearly 60%
of the young(age 15-24) are jobless.
It refers to economy-wide fluctuations in production, trade and economic activity in general over
several months or years in an economy organized
on free-enterprise principles.
It is the upward and downward movements of levels of GDP and refers to the period of expansions
and contractions in the level of economic activities.
Business cycles are usually measured by considering the growth rate of real gross domestic product. Despite being termed cycles, these fluctuations in economic activity can prove unpredictable.
An economic expansion is an increase in the level
of economic activity, and of the goods and services available. It is a period of economic growth
as measured by a rise in real GDP.
It is marked by an upturn in production and utilization of resources. Economic recovery and prosperity are two successive phases of economic expansion.
Market Watch is the screen on which you can track your selected stocks.
In this one can add stocks and F&O contracts and select the
details (open, high, low, close, last traded price, total traded
quantity, percentage and absolute change, trend etc.).And all
this will be Live!
AD VALOREM TAX
A tax based on the assessed value of real estate or personal
property. Ad valorem taxes can be property tax or even duty
on imported items.
Property ad valorem taxes are the major source of revenue
for state and municipal governments.
An international customs document that allows its users to
eliminate import duties and taxes and clear customs quickly
on temporary imports into participating carnet countries and
During a recession, Macroeconomic indicators
such as GDP, employment, fall, while bankruptcies
and the unemployment rate rise.
For example, the carnet is helpful to music tour managers
who need to bring equipment and merchandise related to a
show into a country for a few days or a few weeks.
Government responds to recessions by adopting
an expansionary macroeconomic policies, such as
increasing money supply, increasing its spending
and decreasing taxation.
Almost all types of goods can be imported with an ATA carnet
except for consumable goods, disposable goods and mail.
Duties (tariffs) that are imposed by a country to counteract
subsidies provided to a foreign producer.
It is a business cycle contraction, a general slowdown in economic activity. Generally it occur when
there is a widespread drop in spending due to a
financial crisis, an external trade shock etc.
A nation or entity that is self-sufficient.
For example, a country that is functional without partaking
in any international trade. From an economic view, autarky
involving the elimination of foreign trade has proved unsuccessful, and is more of an Utopian ideal.
The Sensex plunged 769 points, or almost 4 per cent - the most in two years - to 18,598; while
the Nifty lost 234 points, or 4.08 per cent, to close at 5,507 on Friday. The indices have lost 4.26
per cent and 6.73 per cent, respectively, since the beginning of the year. The Reserve Bank of
India's (RBI) curbs on Forex outflows announced on Wednesday, August 14, 2013, to stem rupee's slide rattled investor sentiment.
Along with the steep fall in the rupee, fears that the US Federal Reserve will begin to scale back
its monthly bond buys in September 2013 also dampened investor sentiment.
The rupee hit a fresh record low of 62.03 on Friday, August 16, 2013, and the outlook is grim.
Most analysts expect the currency to hit even lower levels say 63-64 against the dollar in the
short to medium term. The RBI has taken a slew of measures since July 15 to stall the rupee's
slide, which is Asia's worst-performing currency this year. Measures include hiking of shortterm interest rates by 200 basis points and squeezing liquidity.
Additional curbs have been put on gold imports, a key factor in the ballooning of the current account deficit after crude oil. However, most of the measures undertaken by the RBI to check
speculation and outflows have seen little effect. However, measures taken by the RBI earlier this
week have sent out a signal that it may not hesitate to take further steps to curb capital outflows
fuelled bearish sentiment. Stocks were ravaged across the board with many blue chip stocks
such as Larsen & Toubro, State Bank of India and Grasim Industries crashing to 52-week lows.
The top performing companies were TCS, Reliance, ONGC, ITC, Infosys.