2. Banks may get to fix interest rate on savings a/c The Reserve Bank of India has moved a step forward in its proposal to deregulate this interest rate. the central bank has now set up a working group to look into the modalities of deregulation, said RBI deputy governor UshaThorat at a Ficci-IBA seminar in Mumbai on Wednesday An important consideration is whether deregulation of savings rates would draw more population into the fold of formal banking system
3. Deregulation would mean that banks would have the freedom to set the interest rate on savings accounts based on their need for funds. At present, the rate of interest on savings deposits is mandated by RBI at 3.5%. Most banks want to reduce the cost of savings deposits as these are operational accounts with several free services. Savings accounts provide banks with low-cost funds of an enduring nature which facilitate asset-liability management and help lower lending rates. Totally freeing rates could, in situations where there is a virtual monopoly of banking, lead to lowering rates in some areas while leading to increase in other areas.
4. BCCL invests $4 million in Instamedia Instamedia, a start-up company that provides on-demand content for a slew of internet sites, has raised $4 million from Times Internet (TIL), a subsidiary of India’s largest media group Bennett, Coleman & Co (BCCL). Industry watchers feel that raising $4 million of series A investment within a year of starting up is a validation of the company’s business model that targets both enterprise and consumers. Instamedia plans to use the proceeds of the strategic investment to grow its network of writers and accelerate its technology platform development.
5. The company also plans to launch local sites, targeting the European and US audiences, which already today drive over 60% of their traffic. The company’s 15 network sites run some of the fastest growing Internet sites in verticals such as lifestyle, green living and technology The in-house proprietary platform, Instapress, which drives accountable and measured return on its content without compromising quality, has been one of the key drivers of its growth.
6. HC says Vodafone must pay tax on Hutch buy A decision by the Bombay High Court in the landmark Vodafone tax case has tipped the equation in favour of the Indian taxman, as the court has accepted its jurisdiction over Vodafone’s India acquisition. The high court ruled that Vodafone must pay capital gains tax on its $11-billion acquisition of a controlling stake in mobile phone operator Hutchison Essar that was completed in 2007. Estimates published prior to the judgement assign a $2-billion tax laibility on vodafone.
7. The court has given the company eight weeks. “Vodafone remains confident that there is no tax to pay on the transaction,” said a company statement. The final outcome of the case may influence valuations and structuring of M&A transactions between offshore entities with underlying assets in India. However, experts said the high court ruling raised a new debate on whether the court said only a part of the transaction was taxable, or the entire transaction. The taxman can say since the entire underlying asset is in India, it has jurisdiction on all of it. The company can say only 15% of stake acquired has links with India, therefore, only that portion is taxable.
8. Punjab seeks greenhouse farming techniques from Costa Rica Punjab deputy chief minister Sukhbir Singh is visiting the central American country to study its model of greenhouse cultivation that has resulted in substantial improvement in quality and yield of crops, giving better returns to the farmers. Badal said that Punjab is facing a major problem of near stagnation of productivity of major crops i.e. paddy and wheat and degradation of its natural resource base.
9. There is a dire need for diversification. His visit to farms in costarica was to have on the spot knowledge and assessment of the technological improvement of yield and quality of vegetable crops that results in bringing better returns to the farmers.
10. RBI eases infrastructure lending norms Companies like IDFC and IL&FS, which are engaged in providing infrastructure finance, will now have more headroom to lend to single projects, with the Reserve Bank of India relaxing the prudential norms. RBI has also relaxed exposure limits for banks lending to infrastructure finance companies (IFCs) — it has allowed a bank to advance up to 20% of its capital funds to an IFC. The relaxation has been brought about by categorising infrastructure finance companies differently from other finance companies.
11. RBI classified finance companies under three categories — asset finance companies, loan companies and investment companies. To be recognised as an IFC, an NBFC has to ensure that at least 75% of its assets are deployed in infrastructure loans. These companies should also have a minimum net worth of Rs 300 crore and a minimum credit rating of ‘A’ or its equivalent. Further with a view to encouraging larger flow of funds to infrastructure, the exposure of a bank to infrastructure finance companies has been enhanced up to 20% of its capital fund,” the RBI statement said.
