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After CRR, RBI may cut repo rate
Rupee Volatility
Overseas lending fully secured: ICICI
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Satyam to hire 15,000 this fiscal
Aviation Notes
Tax Advice
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After CRR, RBI may cut repo rate
New Delhi, October 12 "There may be 50 basis point cut in repo rate in the mid-term policy review," UCO Bank CMD S.K. Goel told PTI. The central bank is scheduled to announce its mid-term monetary policy review on October 24. The repo rate was last raised by 50 basis points to 9 per cent in the first quarterly review of the credit policy announced on July 29. Punjab National Bank executive director J.M. Garg said expectations are that there could be some cut in the repo rate. The central bank would take a decision depending on how the situation unfolds, he said. With liquidity crunch becoming a major issue in the system and inflation falling below 12 per cent mark, the RBI reversed its tight monetary policy recently. In order to infuse about Rs 60,000 crore liquidity in the cash-strapped banking system, the apex bank had slashed the requirements for banks to keep cash with the central bank by 150 basis points. The decision, taken on Monday and Friday ahead of the mid-term review, came into effect from yesterday. According to the HDFC Bank chief economist Abheek Barua, a fall in inflation may prompt RBI to cut repo rate by 25 basis point in the mid-term review later this month. Even the report, prepared by the US-based financial institution Citigroup, said that given the worsening global situation policy rates cut are not ruled out. However, there are some who believe that for the time being RBI would maintain the key policy rates unchanged as growth in money supply is still about 21 per cent. "Although the probability of a repo rate cut has increased, We continue to think that the RBI will use liquidity management measures such as easing the CRR and also the statutory liquidity ratio (SLR) in the first instance to loosen liquidity," Goldman Sachs said in a report. With inflation still hovering around 12 per cent, the best case for RBI is still to be on hold on October 24, unless financial condition continues to deteriorate further, it said. Besides, the government will also inject more funds into the system within 10-12 days through the supplementary demands for grants which will come up for approval before Parliament later this month. "In about 10 or 12 days from today when the supplementary is passed (by Parliament), a substantial amount of liquidity will be infused into the market," finance minister P Chidambaram had said. PTI
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Rupee Volatility
Chandigarh, October 12 Because of this sharp volatility, exporters in the region are now adopting a wait-and-watch policy. They say that they are still waiting for the rates to stabilise before they can book the orders. "What if the rupee appreciates once again and reaches 39 to a dollar as in last fiscal? We will be ruined, as even forward booking of dollars cannot be done for the entire export turnover," say most exporters. The rupee had appreciated by almost 30 per cent last year, before it fell again since April. After trading in a range of Rs 39.89-Rs 40 to a dollar last year, the rupee has now been depreciating for the past seven months (48.43 to a dollar). Though exporters can forward block dollars (based on interbank transaction rate or IBR) for confirmed orders, most of them are wary fearing that volatility could lead to huge losses. Avinash Gupta, managing director of RN Gupta and Co., a Ludhiana-based steel forging export unit, says that though for now they are happy at the fall of rupee as they are getting more rupees per dollar, the euphoria will be short-lived. "Our customers have started negotiating the rates with us ever since there has been a depreciation of rupee. But we are being cautious now as the rupee could once again appreciate like last year, and we would end up taking heavy losses," he adds. Gaurav Sud, managing partner of Jalandhar-based Prime Leathers, a leading leather exporter, says that they are adopting a wait-and-watch policy. "On one hand, there is a sharp volatility in the currency and on the other, orders from the USA have begun to dry up. Indian exporters are not facing the heat of the global recession now as the orders being delivered were booked before the economic meltdown. Next year, we are expecting sharp decline as orders begin to dry up now," he says. Agrees S.C. Ralhan, regional chairman of Engineering Export Promotion Council,"This is a very dangerous situation for exporters, as fluctuation in currency is to the tune of Re 1 per day. Exporters have to be very cautious even for forward booking of dollars as not many orders are coming their way. Also, the falling rupee means that they now have to pay more in rupee terms to import their raw material".
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Overseas lending fully secured: ICICI
New Delhi, October 12 "These loans have been actually extended to the overseas subsidiaries of large Indian blue chip companies and are fully secured," ICICI Bank joint managing director Chanda Kochhar told PTI over phone from Mumbai when asked if the bank's overseas exposure is vulnerable to global meltdown. The advances extended account for about one-fourth of loan book, Kochhar said, emphasising that the bank was well within its prudential norm. PTI
Files complaint against some brokers
ICICI Bank today filed a complaint against some brokers and websites that were creating panic among depositors and shareholders by spreading rumours about the financial health of the bank.
The complaint filed before additional commissioner of police economic offence wing of Mumbai Police said certain people were acting in concert to spread "malicious rumours" through various media to gain financial benefits by hurting the bank reputation.
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Satyam to hire 15,000 this fiscal
New Delhi, October 12 "We have already given guidance for the year, in terms of revenue and recruitments. We will recruit 14,000-15,000 people this year," Satyam Computers chairman Ramalingam Raju told PTI. However, he added that the company may postpone some of the new recruitments for the next quarter. Last year, the company had recruited 18,000 employees. But on the net basis, taking into consideration the attrition of 12.5 per cent and people being put under the performance watch, the intake could be around 8,000, he said. Satyam currently has over 53,000 employees on its rolls.
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Aviation Notes It is indeed laudable that an ultra-modern, sophisticated tower will be ready by March 2010, six years in advance of the scheduled date. It is in the fitness of things that the world-class terminal III should have world-class tower at the Indira Gandhi International Airport (IGIA) , undergoing complete modernisation and overhauling. The Rs 100-crore tower will have the latest gadgets. It will be constructed at the area from where the view of all four runways is clear for the naked eye. It will be much taller than the 75-metre tower constructed at Hyderabad. The aviation analysts maintain that world-class tower is necessary. But what is much more essential is to have dedicated and competent air traffic controllers (ATC) because safety of passengers and aircraft rest with men in tower and not tower in itself. As of now, there is utter paucity of trained and competent ATCs in the country. Apart from this, there is unrest in the unit owing to faulty wage structure. The new civil secretary M.Madhavan Nambiar in particular and directorate-general of civil aviation (DGCA) should take speedy action in providing needed training to the ATCs as also look into the wage norms so that ATCs in tower are able to work long hours with enthusiasm. There is no doubt that the GMR consortium will complete the project on time. But rewarding results will accrue only when there is work-culture, discipline and healthy coordination among all agencies from customs to immigration to police to airport officials and airlines. This, according to analysts, will be possible if there is a trouble-shooter who oversees the functions of all agencies. As of now, all agencies enjoy autonomy and they are answerable to their own bosses. AI expansion plans
As National Aviation Company (Air India) receives A-319, it will initiate flights to West Coast in the US. It will also reintroduce flights to Australia and South Africa. All three destinations are highly lucrative as a large population of Indians are stationed there. Air Indias visibility will be noticeable with aggressive marketing and salesmanship. It will have to depend upon its own staff since travel agents will be virtually non-existent with the elimination of commission to them by airlines. The CMD Raghu Menon has gone on record saying that 38 out of 111 aircraft will be received before the end of the month. The entire deal will be executed by 2012. According to Menon, the merger will be over by June 2009. The unrest in Indian section remains. The merger has proved a grand success, as talked about. The work culture and discipline has not returned. There are many bottlenecks which are affecting the smooth growth. Air France is also trying to improve its visibility ex-India. It is seriously contemplating of initiating flights from Hyderabad, Kolkata and then from Ahmedabad. It has already commenced its orientation course for hostesses and other officials. |
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Tax Advice Q. After his B.Sc (hotel management & tourism) my grandson is seeking admission to an Associate Degree (a professional course) at a recognised centre of higher learning in the USA. I am to support him. Could you kindly enlighten me on these points? 1. Am I entitled to tax exemption on the payment made by me toward his tuition fee and other charges? 2. Is there any limit on the amount to be paid for his education? 3. What formalities are required for tax exemption? P. Sagar, Chandigarh A. An assessee is entitled to a deduction of the amount paid as tuition fee (excluding any payment towards the development fees or donation or payment of similar nature) whether at the time of admission or thereafter to any university, college, school or other educational institutions situated in India for the purposes of full-time education of any of the two children of the assessee. The above deduction is allowable within the overall limit of Rs 1 lakh provided by the aforesaid section. In view of the above provisions, you would not be entitled to claim any deduction in respect of payment made towards tuition fee of your grandson. The answer to your query no. 1 being in negative I am not giving a reply to query no. 2 and 3 which are connected with the amount of deduction allowable. Compensation to wife
Q. Please advise on the following questions:- (a) Whether compensation granted to the wife by the husband as a result of mutual divorce is subject to Income-tax? If so, under what provisions of the I.T. Act? (b) Should it not be exempt from tax for the reason it is not the income earned by the wife but it is actual reimbursement of expenditure incurred by wife's parents in solemnising the marriage, including dowry given to the husband's family? A. Dev, Mohali A.
It has been held by the Bombay High Court in the case of Princess Maheshwari Devi of Pratapgarh, Poona v. Commissioner of Income-tax (1984) (147 ITR 258) that any lump sum amount of alimony received by the wife by virtue of decree of the court would be a capital receipt. The alimony in the shape of monthly payments has been held to be an income in the hands of the recipient and chargeable to tax. The court, however, made an observation that a suitable amendment should be made to see that in case where the payment of alimony is made by husband from his income and is such that the same cannot be claimed as deduction in the assessment of the husband that should not be taxed in the hands of the wife. However, so far no such amendment has been made in the Act. Capital gains tax
Q. I have offered some equity shares which I was holding for more than a year and some which I purchased just a fortnight back for buyback. How many of these will be accepted, it is a guess but no S.T.T./S.T. etc. will be charged. Please enlighten about the tax liability on short term as well as long term and by which time this tax has to be deposited. Can I wait till the next deposit date i.e. 15th December? Sohan Lal
Rampal, Chandigarh A. The capital gain arising on the sale of equity shares which were purchased more than a year back would be a long-term capital gain. The capital gain arising on the shares which were purchased a fortnight back by you would be a short-term capital gain. The long-term capital gain in case of listed equity shares, if the transaction in respect thereof has been subjected to Securities Transaction Tax would be exempt from tax. In case the transaction has not been subjected to Securities Transaction Tax, the capital gains tax on the long-term capital gain arising on such a transaction would be limited to 10% of the capital gains so earned. The short-term capital gain would be chargeable @ 15% plus applicable surcharge and education cess. The tax is required to be paid on 15th September (30% of tax), 15th December (60% less 30% already paid) and 15th March (100% less 60% already paid). You can now pay the tax by 15th December but you will have to pay interest for three months under Section 234C of the Income-tax Act 1961 (the Act). Joint account in SCSS
Q. Kindly give your valued advice on the following points/doubts: 1. In a joint account opened under Senior Citizens Savings Scheme 2004 Joint B i.e. payable either or survivor if the depositor whose name appears first dies whether the second depositor whose name is second can claim payment without penalty of one or two per cent or else he will have to pay this penalty if he wants premature payment. Kindly quote rule/order in support of your reply. Dev Raj Aggarwal, Ludhiana A.
The scheme allows the opening of a joint account with the spouse of the depositor. In case of death of the depositor before maturity, the deposit amount can be refunded along with the interest payable at the post maturity rates. This is as per second proviso to Rule 8 of the Senior Citizens Savings Scheme Rules 2004. |
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