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US approves $700-b bailout plan
FM’s advice to banks: Function as banks only
Counterfeit Notes |
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Aviation Notes
Investor Guidance
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US approves $700-b bailout plan
New York/Washington, October 4 The US House of Representatives approved the rescue plan by a vote of
263- That sent the measure to President George W. Bush, who quickly signed it into law, concluding two weeks of high-stakes haggling over the plan that had roiled and captivated global markets. Markets pivoted on passage of the US bailout, as investors' attention turned to signs of a gathering recession. Stocks, which had been higher before the vote, dropped, with the S&P 500 index closing at its lowest level in almost four years. The dollar was also in retreat. "This probably comes a bit too late. If this had been done earlier, it probably would have had a much bigger impact in restoring confidence," said Anna Piretti, economist at BNP Paribas in New York. US Treasury Secretary Henry Paulson, who had been administration's chief lobbyist for the plan, said he would move quickly to buy up distressed assets from banks. "We have shown the world that the USA will stabilise our financial markets and maintain a leading role in the global economy," Bush said in a short statement delivered before cameras outside the White House. Analysts cautioned it was unclear whether the US plan would work as advertised. "There are more questions than answers out there still," said David Kelly, chief market strategist of JPMorgan Asset Management. "Even if the banks do participate, how willing will they be to make new loans into the economy if they can get rid of the bad ones?" The US government has run up a bill of $1 trillion in recent weeks as it rushed to stabilise its banks, including the seizures of Fannie Mae and Freddie Mac. That cost is equal to over 7 percent of the world's largest economy. — Reuters
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FM’s advice to banks: Function as banks only
New Delhi, October 4 "A banker can only be a banker. If he tries to be something else, we will face the same crisis as the US and Europe are facing today," he said while speaking at a special banking summit on north-eastern states here. Pointing out that banking system was not a substitute for government, civil society organisations or NGOs, he said, banks could only play a limited role of a facilitator for development by providing credit. "A bank has to be a bank. And the bank can only be a bank if money that is lent comes back to the bank," he said while responding to the demand of extending the scope of the farm debt waiver scheme in the north eastern region also. Attributing the US sub-prime mortgage crisis to failure of borrowers to return the money to banks, Chidambaram said, "Look at the consequence. The entire banking system in the western world stands completely frozen today." Following the financial crisis, he said, "Nobody (in the US) is lending to anyone despite the central bank pumping in billions of dollars... Nobody lends a pie to anyone. The chairman of one of the largest banks in the world told me that his bank has stopped lending since January 2008." Unfortunately, he added,
the elementary truth about banking was missed by
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Counterfeit Notes
Chandigarh, October 4 The apex bank has fixed a tolerance level of two pieces per million for remittances received till June 2009, and one piece per million for remittances after July 2009. This means that in case more than two counterfeit notes of up to Rs 100 denomination are detected in one million pieces, a penalty of Rs 1,000 per piece will be imposed, while a penalty of Rs 5,000 per piece will be imposed in case the denomination of counterfeit notes seized is Rs 500 and Rs 1,000. RBI has also said that in case of three instances of penalty for any currency chest branch, a penalty of Rs 5 lakh will be imposed. In case mutilated or deliberately cut notes are found in chest balances, a fine of Rs 5,000 per piece will be imposed. These heavy penalties have been imposed as part of a new scheme of incentives and penalties for banks introduced by RBI, which become effective from October 1. Fines/penalties of Rs 5,000 will also be imposed on each irregularity for non-compliance of operational guidelines by currency chests like defunct CCTV, treasure kept outside the strong room or non-utilisation of note sorting machines. In case, the banks repeat the fault, the penalty will be enhanced to Rs 10,000. Heavy fines, ranging from Rs 10,000 to Rs 5 lakh will also be maintained in case any deficiency in service in currency area is detected. These guidelines have been accepted with a pinch of salt by the bankers, who feel that the lack of trained staff and staff shortage in big branches is bound to bring the element of human error. But there is something to cheer for the bankers, as the RBI has also announced high incentives like bearing 50 per cent of capital cost and revenue cost on opening of new currency chests in under- banked areas. Banks will also get Rs 25 per bag for distribution of coins over counter, besides getting incentives for exchange of soiled/mutilated notes and establishment of coin-vending machines.
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Aviation Notes The 'blues' of passengers on domestic and interntional flights are multiplying at an alarming speed. They will have to shell out much more fares than they had bargained for. Apart from paying for hike in fuel prices, they will have to bear the burden of part of the 5 per cent commission paid to travel agents by the airlines. Come November 1, airlines will pay no commission to agents. The travel agents cannot sustain without any commission, so they will debit part of the five per cent to the passengers. The aviation analysts say that it will be quite substantial and travelling by air on domestic sectors will receive further setback. Why are airlines withdrawing commission to the agents? It is because they are sustaining heavy losses. To stay afloat, they are withdrawing commission to the agents. It will be substantial saving and it will help them cut losses. There was a time when agents were main beneficiaries in the three-way traffic. The International Air Transport Association (IATA) agents got 9 per cent commission while general sales agents (GSAs) got 12 per cent. They were also being paid
the over-riding commission in addition to some From 9 and 12 per cent to IATA-agents and GSAs, respectively, the airlines reduced it to 5 per cent. Now it will be zero per cent. There is every possibility of many airlines closing their shops because passengers will be unable to pay part of the commission as 'service charges'. This is not all. But passengers have to carry the burden of 'development charges'. It is not known whether these charges will be for a brief period or stay permanently. For international travelling, this is the time when the DGCA should ask all carriers, domestic and international, to specify basic fare and taxes and levies so that passengers exactly know how much they are paying for what and what fills the coffers of the government and what goes in the kitty of airlines. Of late, the international travelling has become very costly because there is a huge hike in visa fees, particularly for the UK and the US. According to aviation analysts, the situation is very fluid. The National Aviation Company has ordered several new aircraft. There is a fear that there may be more capacity than passenger-load. The general situation is also uneasy and there are continuous bomb blasts. The tourist traffic has decreased. Shocking
The merger of the two national airlines, Air India and Indian, have not sit serenly on the new entity, National Aviation Company. Every second day, it attracts negative publicity.
The flight AI-125 (Jumbo 747) for London was air-borne for about 90 minutes when the commander decided to return to base, Mumbai, as all toilets were choked. The tons of precious fuel was wasted on flying to and back 400 nautical miles. Who was guilty of declaring that flight was ready for take-off? The hostesses should have checked toilets before aircraft taxied to the runway. The DGCA is yet to make known its findings as to who the culprit was for causing needless concern to the airline bosses. Besieged by financial problems, the airline has deferred its plan for European hub. |
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Investor Guidance Q: After attaining the age of 60 I retired from my job and returned to India on 16.04.2008 and since then I am in India. I was an NRI for the last seven years and throughout this period stayed in India for 174 days only. Basically I used to visit India on annual leave once a year and these facts can be verified from my passport entries. Under the above stated facts would I be RNOR? Now as per your past Q&As, I can claim benefit of taxfree interest for three financial years on my investment - NRE Deposits & FCNR Deposits. 1) Kindly reconfirm if such benefits are for two or three years. 2) Do I have to inform my banks to treat me as RNOR and also my deposits as 3) Do I have to file income tax return showing interest income and claim rebate or is filing tax return not necessary? I was trying for some overseas job opening but till now I am not successful hence I may lose NRI status and opt for RNOR status / benefits. I also want to know if I get a job and again get status of NRI whether my RNOR status will be automatically converted to
NRI? A: Since you have returned to India on 16th of April and have spent 174 days in the past seven years in India, you would get the RNOR status for two years and not three. Note that the RNOR status makes your foreign income and interest on FCNR deposits tax-free and not the interest on NRE deposits. The interest on NRE deposit will become taxable since the date of your return to India irrespective of your RNOR status. The RNOR status is automatic as per the provisions of the law and you do not have to inform your banks about it separately. However, you will have to inform the banks about your return to India and consequently redesignating your NRE account(s) as Resident accounts. Income tax return filing is mandatory if and only if your Indian taxable income is above Rs. 1,50,000. If you were to leave India again for employment abroad, your status will change back to NRI from RNOR. Gratuity ceiling
Q: Please clarify for an employer that under gratuity law how much maximum gratuity amount is payable once it is due to an employee. Please clarify whether gratuity amount has any maximum ceiling limit or not under any industrial act. For example; if gratuity payable works out more than Rs.3,50,000/- and above, can the employer refuse to pay excess over Rs.3,50,000/- or is it compulsory to pay more with a tax obligation to an employee? Can you also confirm whether the definition of salary with regard to the eligibility for calculation of gratuity, bonus, PF, etc means basic + HRA + medical + conveyance + other allowances? A: Any death-cum-retirement gratuity received under the pension rules (or any similar scheme) by employees of central or state government, any local authority or defence and civil services is wholly exempt. Gratuity received under the Payment of Gratuity Act, 1972 is exempt up to a limit of gratuity paid at the rate of 15 days (last drawn) salary per year of completed service or part thereof in excess of 6 months or Rs 3,50,000 whichever is less, provided the employee has been in continuous service for 5 years. In the case of employees of other statutory corporations and employees in the private sector to whom the Payment of Gratuity Act is not applicable, the exempt amount would be the least of the following: This exemption is also available to the widow (but not widower?), children and dependents if it is paid after the death of the employee. Salary includes DA if the terms of employment so provide but excludes all other allowances, bonuses, commissions and perks. The payment of gratuity, while the employee is still in service, does not qualify Gratuity received from a previous employer will be pooled with gratuity received from the present employer for computation of the exempt limit. It is only the Payment of Gratuity Act, 1972 which puts a ceiling of Rs. 3,50,000 on the amount of gratuity payable. In the rest of the cases, the ceiling is dependent upon the Employment Rules. HRA deduction
Q: Myself & my wife both working in a PSU, I want to know that in this case HRA should be admissible to both or not, what are the rules? can both get the
HRA? A: HRA which stands for House Rent Allowance is an allowance / income that is given by an employer. The employee earns HRA irrespective of whether he or she is paying rent for the premises lived in. However, a deduction from such HRA is only available if the receiver pays rent for the premises he or she lives in. So in your case, if you are living in a house that is owned by you and / or your wife, neither of you will get any deduction from
HRA. On the other hand, if you live in a rented property, then HRA deduction will be available to the person paying the rent. If both of you bear the rent burden, HRA deduction would be available in proportion to the rent paid by you respectively. Note that the HRA deduction is the least of the rent paid or 50% of salary or excess of rent paid over 10% of salary. The authors may be contacted at wonderlandconsultants@yahoo.com. |
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