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Bankers hint at lower interest rates
Industry welcomes RBI’s move
US, European markets post solid gains
Aviation Notes
Investor Guidance |
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Bankers hint at lower interest rates
Mumbai, November 1 State-owned Bank of Baroda's CMD, M.D. Mallya said the RBI measures will help to support growth and has come as a clear signal to banks to soften their interest rates. "This is a clear signal to banks to reduce their rates. Our ALCO will meet on Monday to take a call on our rate-structure. There is a southward pressure on both the deposit and lending rates," Mallya told PTI. Country's largest private sector lender, ICICI Bank's joint managing director, Chanda Kochhar said the RBI measures were targeted at maintaining adequate liquidity and financial stability in the system as well as supporting the economic growth. "The fundamentals in Indian economy and banking sector are strong and these measures will help banking sector to play its role of financial intermediation and will keep the economy on growth path amidst challenging global condition," Kochhar said. While India's second largest public sector bank, PNB has already reduced its prime lending rate by 0.5 per cent from December 1, many other banks have scheduled their asset liability meeting early next week. Another leading public sector bank like Bank of India is also likely to reduce its lending and deposit rates in the near future after evaluating the impact of the latest set of policy measures from the central bank, BoI's CMD, T.S. Narayanasami said. Other public sector lender, IDBI Bank's CMD Yogesh Agarwal said that the further cut in the RBI key rates was aimed at easing the liquidity situation in the system further but the bank would watch the market conditions before revising its rate structure. IDBI bank's ALCO is likely to meet in the near future to assess the overall liquidity conditions. Echoing a similar view private sector lender, Yes Bank's managing director and CEO, Rana Kapoor said banks were likely to take a cue from the central bank's policy actions and may revise their rates southwards in the near term. "Today's RBI measures have been primarily aimed at supporting the growth momentum. Banks are now likely to slash their interest rates in the near future," Kapoor said, adding that "Yes Bank's ALCO will meet early next week to take a decision on its interest rates." HDFC's managing director, Keki Mistry said the lender would wait some more time to watch the market situations prior to taking a call on any revision on its interest rates. Kotak Mahindra Bank's head retail liabilities, K V S Manian said the bank would evaluate the liquidity situation prior to taking a decision on its lending and deposit rates. "The repo rate cut has come as a clear signal for banks to reduce their rates. If the lending rates should come down, a similar reduction should happen on the deposit side as well," Manian said. — PTI
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New Delhi, November 1 The industry chambers described these steps as ''timely'', coming on the back of a sharp increase in the overnight lending rates and serious concerns about the availability of credit at reasonable rates to various segments. The chambers expressed the hope that commercial banks will now take the cue from the Central Bank's policy measures and lower lending rates. Ficci president Rajeev Chandrasekhar said RBI moves signal ''attention shifting to growth'' and ''banks must now cut interest rates and credit must flow to industry with immediate effect.'' CII director-general Chandrajit Banerjee said along with these measures, the RBI could also think of relaxing the restrictions on FII investment in the government debt market, so as to develop a new class of buyers for these securities. Terming the RBI's steps as ''move on right path'', Assocham president D.S. Rawat said this would not only subside the interest rates but also bring enough liquidity into the market to help Indian Inc expand, diversify and modify its plans. The chamber suggested that the CRR and repo rates should further be brought down at 2004 levels. PHD Chamber secretary-general Krishan Kalra said, these steps are indeed welcome measures towards striking an optimal balance between preserving financial stability and sustaining the growth momentum. — UNI
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US, European markets post solid gains
New York, November 1 The Dow Jones Industrial Average yesterday jumped 144.32 points (1.57 per cent) to close at 9,325.01, pushing gains for blue chips for the week to an eye-popping 11 per cent. But for the month the index was still down 14 per cent. The NASDAQ composite climbed 1.32 per cent to 1,720.95 and the Standard & Poor's 500 rose 1.54 per cent to 968.75. In Europe, following a mixed performance in Asia, sentiment brightened: in London, the FTSE 100 index added 2.0 per cent to 4,377.34, while in Paris the CAC 40 rose 2.33 per cent to 3,487.07. The Frankfurt DAX advanced 2.44 per cent to end the week at 4,987.97.
— AFP |
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SCI to pump in Rs 6,500 cr
Chandigarh, November 1 The company is also planning to add more ships to its fleet of 81vessels and thus double its capacity for carrying cargo. Talking to TNS here last night, the chairman and managing director of SCI, S. Hajra, said the company proposed to invest the money in a staggered way. Instead of injecting the proposed investment in specific projects, SCI will pump in Rs 1,000 crore each year to meet the challenges in the international shipping market. "Focus will be on sectors like crude products, LNG and bulk carriers, with special emphasis on offshore segment," he said. Hajra was here to participate in the launch of a local chapter of an NGO promoted by leading shipping company, Doelhe Danautic. He said the need of the hour was to increase the Indian tonnage in order to keep pace with the growth momentum in trade. "Almost 95 per cent of trade is still done through the sea route. Till two decades ago, 40 per cent of the trade in India was done through the Indian vessels. This has now reduced to 12 per cent. Thus there is need to increase the capacity in Indian shipping industry. With the international trade through sea growing by 20 per cent each year, we need to increase the tonnage from the present nine million gross tonnage (MGT) to 20 MGT," he said. Hajra said as part of this, SCI, too, proposes to increase its capacity from five million dead weight (DWT) to 10 million DWT in the next five years. "We had placed an order for 32 ships worth $1.87 billion, of which four ships have already been delivered and the remaining will be delivered shortly. We will also be inviting bids for $3 billion order of 40 ships," he added. Hajra also said the government would have to take initiatives to help increase growth in the Indian shipping industry. "The shipping industry requires a facilitative regime, wherein the government can fix a percentage of cargo to be shipped only on the Indian vessels. Even the taxes on this industry, which amount to 9 per cent should be reduced to the global tax rate of 1.5 per cent," he said.
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Aviation Notes
The general aviation in the country has been in a dismal state of health owing to poor maintenance of aircraft by state governments and private industrialists.
Already sufferer in losing experienced pilots and aircraft because of utter apathy towards maintenance, Punjab lost two highly-qualified commanders, Dilip Singh Kataria and Manjit Singh Khokhar, as a 26-year-old, virtually condemned King Air C-90 Beechcraft crash-landed off Ludhiana on Wednesday morning (October 29). It was just a sheer providence that no senior politician was on the ill-fated aircraft which was pulled out of the Delhi hangar for repairs and overhauling before subjecting it for VIP operations. It was nothing short of grave blunder to have repaired the aircraft which was lying in disservice for as many as seven years. Purchased in 1978, it had crash-landed in Hisar air base in 2001. Analysts say that the aircraft needed to be disposed off instead of making it serviceable only to lose young lives. The aviation sector in particular has plunged into a whirlpool because of total adhocism existing at the directorate-general of civil aviation and ministry of civil aviation. The situation has reached such an abysmal depth that the ministry is unable to find an official who can head the most vital department of the DGCA. The season of disasters has begun. If the central government and state governments stay in coma, many more awkward situations may arise in the country in which ‘aviation boom’ has already turned ‘aviation bane’. The minister of state for civil aviation Praful Patel and government owe an explanation to travelling public for the anarchy that has plagued the flying industry in the country. The airlines frame rules; they violate them with impunity and go scot-free because the powers that-be are lax. The airlines are indulging in sheer blackmail exercise to jack up fares on certain routes to boost their profits and also cancel flights at their sweet will owing to low load factor. If such nasty practices are not checked, there will be ‘jungle raj’ returning in the country in the 21st century. As train services to Kolkata were cancelled owing to unprecedented unrest in Bihar, the airlines arbitrarily jacked up the fares from, say, Rs 5,000 to Rs 20,000. To give reason of ‘demand and supply’ for jacking up prices on certain sectors is totally unacceptable in any civilised society. This is not the only instance of causing hurt to the public. The fare on the leg of Delhi to Leh is much less than the fares from Leh to Delhi. Here again, the airlines adhere to blackmail strategy. The passengers in Leh have to return to base to join their families or study or work. They are made to pay more. The ‘open sky’ policy, initiated in 1990s, has become ‘plague sky’ exercise with the minister and government staying no more than mute observers. As man-created false notion of huge demand has crash-landed, the airlines are canceling flights or bunching them together without any prior notice subjecting the passengers to uncalled for inconvenience and loss of time. In October, about 150 flights have been cancelled or clubbed together owing to diminishing load of passengers. Such instances of unethical practices in civil aviation are on the rise in the country. If the government does not act immediately to curb such doings, the twin-sectors of aviation and tourism will lose whatever little sheen they have on their feeble bodies. |
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Investor Guidance
Q: I have the following question regarding the capital gain tax on sale of a real estate property. I am a non resident Indian (NRI) settled in Canada. I also hold an OCI card. I have PAN card also. I bought a residential plot in Haryana, India back in 1982. I have sold it now to buy at some other better location.
I contacted a lawyer and was told that I can avoid capital gain by buying capital gain bonds issued by NHAI and REC, which is also confirmed by your answer to a question published last week.
Now my second question is, can I offset this capital gain by buying another plot to build a house in three years or is there a different period or is there an other way to save capital gain tax. A: It is true that capital gains tax can be saved by investing the capital gain amount in bonds. Note that there is a limit of Rs. 50 lakh for investment in these bonds. Also, such investment has to be done within six months of having earned the capital gain. The other way of saving capital gains tax is by investing in a residential house. The time limit is two years from the date of sale of the original asset. In case you are constructing a house, the time limit is enhanced to three years. Note however that the exemption is available only for purchase or construction of a house. If you plan to purchase a plot and not construct a house thereon, the exemption is not available. Standard deduction
Q: I have been contemplating retiring from my regular job soon and later work only on freelance basis if possible. I would like to invest a certain sum in monthly income schemes of banks and earn a decent monthly income. I would like to know assuming I fall in the 10% tax bracket whether I qualify for standard income tax deduction, rebates on LIC and PF, mediclaim investments etc. on this monthly income. A: All taxpayers, whether retired or otherwise, can avail of the basic exemption limit as well as deductions on tax saving investments made by them. Therefore, you can indeed qualify for insurance, mediclaim, PPF deductions etc. upon payments made in these schemes by you. By the way, if you fall in the 10% tax bracket, by making such investments, in all probability you will have to pay nil tax. Lock-in period for ULIPs
Q: 1. If any person takes a ULIP of any insurer with or without insurance cover but does not claim any income tax rebate on this investment u/s 80C and gets it surrendered: A: The period of 5 years is applicable only to ULIP of UTIMF and Dhanaraksha of LICMF which are MF products. For the ULIPs of insurance companies the normal period of 3 years is applicable. Where deductions of income have been allowed on policies which are terminated before premiums have been paid for three years, such deductions shall be deemed to be the income of the assessee for the year during which the policy is terminated.
Incidentally, ULIPs have a lock-in period of three years now. Short-term capital loss
Q: I have purchased 50 shares of Reliance (RIL) at Rs 2674 in May 2008 through off market transactions thru one of my relative. As you would be aware, on account of the current levels of RIL,
I intend to sell them through an online service (with STT) and claim shortterm capital loss, which I can set off against future short-term capital gain. I also intend to purchase 50 RIL shares at current market again. Will this be right decision with respect to tax treatment and investment? Also I have Reliance Power at IPO price (Rs 460) and subsequent bonus received. Can I only sell my initial IPO shares through FIFO method? Can I also take current market price (CMP) for calculating
STCL? (Rs 460-CMP)? A: The answers to both your questions are in the positive. In both cases, you may book short-term capital loss. CMP has to be used in all cases, whether the shares are exbonus or not. If and when you sell bonus shares, the cost would be taken as nil.
Your intention to purchase fresh RIL shares has no bearing on the above tax treatment. Tax liability
Q: I am a 44-year-old woman. My husband is working in a bank. In the banks records, I am dependent on him. I am primarily a housewife. However, over a period of last 6-7 years, I have earned some money (not regular) on my own by engaging in some irregular work like taking tuitions, conducting cooking classes and yoga classes at different times. The amount earned varies from Rs. 30,000 - Rs. 40,000 per year. It was my own effort on account of my professional competence. At times, I have also received small amounts as gift from my father. I have affidavit to this effect from my father. A good part of these earnings was invested by me in KVP and Mutual Funds. I also have a PAN. However, I have never filed IT return as my income was never above the threshold exemption limit. I now want the following clarifications from you - My husband is an income tax payee and he pays the tax without including my income. I think this is legally correct. However, some persons have advised me that the income earned by me because of my professional competence will be clubbed with my husband's income because I am dependent on him. Please clarify. A: Your understanding is perfect. For clarity, we reiterate that what 'some persons' have told you is entirely wrong. You can have some earning of your own and still be dependent. Only the income earned by you from the corpus gifted by your husband will be clubbed. Another clubbing provision is applicable in case you receive a salary from your husband on an assignment for which you do not have any expertise and specialized knowledge. But the money actually earned by you on account of your competence is not taxable in his hands. The authors may be contacted at
wonderlandconsultants@yahoo.com. |
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