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EU leaders vow faster eurozone reform after S&P downgrades
SBI trims housing loan processing fee
India Inc recovers 20% of market value lost in 2011
Indian carriers likely to suffer
$20 bn debt burden in 2011-12
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Now, AA to end services on Delhi-Chicago route
Tax Advice
ATF import by Kingfisher is bad economics: OilMin
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EU leaders vow faster eurozone reform after S&P downgrades
Brussels/Berlin, Jan 15 In a conference call with reporters and analysts after downgrading nine of the eurozone's 17 countries, Standard & Poor's said it saw continued risks from the debt crisis that has overshadowed Europe for the past two years and said the single currency area was heading towards recession. It also warned that France, which suffered a downgrade to AA+ from the top-notch AAA, was at risk of further cuts if a recession further inflates its debt and budget deficit. "The policy response at the European level has in our view not kept up with the rising challenges in the euro zone," S&P credit analyst Moritz Kraemer said on the call, forecasting a 40% chance of eurozone gross domestic product contracting by up to 1.5% in 2012. The downgrades were delivered hours after talks between private bond holders and the Greek government aimed at restructuring Greece's vast debts broke down, pushing Athens closer to default, an event that would tarnish euro zone unity and pose a contagion threat which could engulf the bloc. In Germany — whose top AAA rating survived unscathed — Chancellor Angela Merkel said the downgrades underlined why a so-called 'fiscal compact' must be signed by member states quickly, and the next bailout mechanism, known as the ESM, should be funded soon. "We are now challenged to implement the fiscal compact even quicker ... and to do it resolutely, not to try to soften it," she said at a meeting of her conservative Christian Democrats (CDU) in the northern city of Kiel. "We will also work particularly to implement the permanent stability mechanism, the ESM, so soon as possible -- this is important regarding investor trust," she added. European Central Bank policymaker Joerg Asmussen warned that Europe's drive to tighten fiscal rules was being softened, considering the latest draft of the agreement a "substantial watering down" of budgetary discipline because it would allow extra spending in extraordinary circumstances, the Financial Times Deutschland reported. Leaders including Merkel have urged countries to tighten their belts with higher taxes and deep spending cuts to rein in massive budget deficits. But that has heightened market concern about their ability to grow their way back to health, pushing borrowing costs even higher for heavily indebted governments. — Reuters France seeks exit from crisis
As the German economy shines, next door France plunges into recession, shedding jobs and losing its top credit rating. But President Nicolas Sarkozy has a plan to save the country, by making it more like Germany. The right-wing leader will on Wednesday host a "social summit" with unions and employers to try to make France's job market more flexible and halt rising unemployment ahead of presidential and parliamentary elections this year. Meanwhile, Prime Minister Francois Fillon told Le Journal du Dimanche in an interview that the French government will do everything in order to regain its triple-A credit rating. — Agencies |
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SBI trims housing loan processing fee
New Delhi, January 15 The bank has slashed processing fee on home loan above Rs 75 lakh to Rs 10,000 from Rs 20,000, while for loans between Rs 30-75 lakh, the fees has been reduced to Rs 6,500 from Rs 10,000 earlier, a senior SBI official said. The new fee structure is applicable starting January 11, the official added. The official, however, added that the processing fee for loans below Rs 30 lakh continues to be 0.25% of the loan amount. The reason for slashing fee is to promote home loan products of the bank, the official said. Competitors like ICICI Bank and Axis Bank charge 0.5% of the loan amount for home loans — both floating and fixed both. At the same time, Bank of Baroda levies a charge of 0.4% of the loan amount or maximum limit of Rs 50,000, while Bank of India charges Rs 20,000 flat fee for housing loans between Rs 25-75 lakh. According to another public sector bank official, banks could offer some incentive to promote home loan product above Rs 30 lakh as there has been some moderation in this segment. It could be in the form of lowering of fee or some concession in rates if interest rates don't come down by the end of the current fiscal, the official added. In other retail loans, particularly auto loans, some banks are offering concession in rate as well as waiving of processing charges to garner higher share. Some bankers also feel that the processing fee may go up in the medium term. However, charges are likely to remain stable for the next couple of months. "Since most of the banks have done away with pre-payment charges, I feel the processing charge in the industry as a whole would tend to go up in the medium term if not in the short run," Axis Bank head (consumer lending & payments) Jairam Sridharan said. — PTI
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India Inc recovers 20% of market value lost in 2011
New Delhi, January 15 It is the large corporate houses like the Ambanis and financial conglomerates like the ICICI and HDFC groups that are leading the gains in stock markets, after taking a huge beating in the previous year. All the listed companies together lost nearly Rs 19.5 lakh crore worth valuation in calendar 2011, when the stock market tanked by nearly 25 per cent amid global headwinds. While markets have appreciated by only about 5 per cent in the 10 days of trading so far in 2012, the total gain in valuation for this period stands at about Rs 4 lakh crore. Out of this, 10 leading business houses together account for nearly one-fourth or over Rs one lakh crore of the gain. According to BSE data, the cumulative market value of all listed firms in the country stands at Rs 57,40,194 crore currently, as against Rs 53,48,645 crore at the end of 2011. The market benchmark, the BSE Sensex, has gained nearly 700 points or about 5 per cent so far in 2012, after falling by more than 5,000 points during 2011. The stock market data shows that market valuations have improved significantly for almost all the large corporate houses so far in 2012, barring a few like Bharti group, Infosys and HUL, and the experts are optimistic about a rebound on these counters as well. Among the large business houses, Mukesh Ambani-led Reliance Industries group has gained over Rs 13,000 crore in its valuation, while Anil Ambani-led Reliance Group has seen its market value surging by about Rs 12,500 crore. The net gain for the Tatas is comparatively lower at about Rs 8,000 crore, largely due to a sharp plunge of about Rs 15,000 crore in the value of IT giant TCS. Otherwise, only four Tata group firms — Tata Motors, Tata Steel, Tata Power and Titan — have posted a gain of close to Rs 20,000 crore in their cumulative valuation. Financial services conglomerate HDFC group has gained Rs 15,000 crore of valuation so far in 2012, while the ICICI group has also added over Rs 12,000 crore to its market value. The Aditya Birla group has gained about Rs 5,000 crore, Adanis have added over Rs 9,000 crore, Larsen & Toubro about Rs 12,000 crore, ITC about Rs 4,000 crore and Mahindras about Rs 2,000 crore. — PTI 8 of top ten cos add over
Rs 47k crore
Eight of the country's top 10 valued companies added Rs 47,292 crore to their combined market capitalisation last week, whereas IT majors TCS and Infosys recorded sharp fall in their value. Infosys last week reported 33% year-on-year growth in net profit but disappointed investors with its revenue outlook due to eurozone debt crisis. Hit by the muted guidance, the company's shares had plummeted over 8% on the day the results were announced. Infosys’ market valuation slipped by Rs 14,463 crore to Rs 1,48,467 crore on Jan 13. |
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Indian carriers likely to suffer
$20 bn debt burden in 2011-12
New Delhi, January 15 In what may sound music to the ears of the industry, the plan body favoured rationalization of taxes on jet fuel and investment by foreign airlines in Indian carriers. A working group of the plan body, which formulated the 12th Plan for the sector, said by not allowing foreign carriers to pick up stake in Indian airlines, access to potential sources of capital and expertise was being denied. It proposed a projected total outlay for the sector at over Rs 54,743 crore for the entire plan period of 2012-17, including Rs 32,963.67 crore for Air India and Rs 17,500 crore for the Airports Authority of India. Noting that half of the "huge debt burden" of $ 20 billion in fiscal 2011-12 was aircraft-related and the rest for working capital loans and payments to airport operators and fuel companies, the working group said the existing foreign direct investment policy "does not permit foreign airlines investment, thereby denying access to potential sources of capital and expertise". It also pointed out that the industry faced "many taxes" like those on fuel, aircraft leases, airport charges, air passenger tickets, air navigation service charges, maintenance costs, fuel throughput fees and other such charges. "These fees and taxes on inputs are either not present in other matured aviation markets, or are much lower there. The Indian air transportation industry is thus laden with very high costs and larger operating losses than their other counterparts globally," the working group of the plan body said. — PTI |
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Now, AA to end services on Delhi-Chicago route
Mumbai, January 15 The airline had been flying the New Delhi-Chicago route since November 2005. However, according to sources in the know of the development, the American carrier will continue to offer travel choices between the US and India in conjunction with its OneWorld Alliance partners British Airways, Kingfisher Airlines and Finnair, via either London's Heathrow and through its code share partner Jet Airways via Brussels. The airline sent out an internal email on January 9 to its employees, saying it will end the Chicago-Delhi services from March. "We’ll cancel the Chicago-Delhi services effective March 1, 2012. Some operational and business changes that occurred prior to the company filing for reorganization will result in a reduction of around 150 airport related (airport services work group) employees," the email had said. The airline said it would refund the passengers affected by the ending of services. It plans to close its operations in New Delhi and reduce airport jobs. — PTI
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Tax Advice
Q: Can an assessee claim deduction of Rs 1 lakh for contributions made during the current fiscal, i.e., assessment year 2012-13) to EPF, GPF, PPF, NSCs, etc, under Section 80C of the Income Tax Act. Also, can he in addition claim deduction of Rs 15,000 extra under Section 80D contributed to mediclaim insurance policies held by the companies for its employees, deduction of which is made from salary for contributions made under these two sections?
— Sham Lal Mittal A: A person can claim both deductions specified by you under Sections 80C and 80D of the Act. Under the direct tax code the following deductions are permissible: (i) Rs 1 lakh for contribution/deposit of an amount towards any approved fund; (ii) aggregate amount of Rs 50,000 paid towards life insurance premium, medical insurance policy and tuition fees for the purpose of full time education of any two children of an individual. Q: My income from pension and interest is more than Rs lakh5. had a post office NSS account from 1989-2011. I have closed this account and the post office has paid the amount after deducting TDS. Should I include this amount in my income tax returns or I show it separately? If so which form do I use to file my returns? Also, my daughter who is a government employee is earning over Rs 30,000 income from saving bank account, FDs and MIS in addition to her salary. Her total income is less than Rs 5 lakh. Will she be required to file income tax returns? — Sampat Dhawan A: (a) The amount received by you towards the refund of your deposit under National Savings Scheme is taxable and has therefore to be added to your income. The same will have to be reflected in the income tax return in the column "income from other sources". The applicable ITR form in your case should be ITR-1 (Form Sahaj) for AY2011-12. The equivalent form for assessment year 2012-13 is yet to be notified. (b) The government notification exempting salaried employees from filing tax returns in case their total income from salary does not exceed Rs 500,000 is applicable for AY2011-12. It is applicable in case these conditions are satisfied: (i) income from salary does not exceed Rs 500,000; (ii) "income from other sources" by way of interest from a savings account in a bank does not exceed Rs 10,000. Your daughter will not be covered in the exempted category as her interest income arises from FDs, MIS and saving bank account. Q: I’m a 70-year-old pensioner. My total pension will not exceed Rs 5 lakh during fiscal 2011-12 (assessment year 2012-13). I'm not having income for this year from any other source. Am I required to file my income tax return for AY2012-13? — B.M. Gupta A: The income tax department notification with regard to the non filing returns for individual assessees whose salary income does not exceed Rs 5 lakh was applicable for assessment year 2011-12. An individual whose total income does not exceed Rs 5 lakh and is aged 80 years or more is not required to file his income tax return for AY2012-13. In your case you will be liable to file your return for AY2012-2013 as you don't qualify for the said exemption. However, in case a notification is issued again for AY2012-13 on the earlier lines, you may not be required to file the return. |
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ATF import by Kingfisher is bad economics: OilMin
New Delhi, January 15 In a detailed response to the application made by Kingfisher to import aviation turbine fuel directly, oil firms stated India is surplus in jet fuel and exports half of its production annually, official sources said. Allowing direct import of ATF may lead to avoidable simultaneous import/export of ATF and undue burden on port infrastructure in the country, the oil firms said. Kingfisher believes that by importing ATF directly, it can make substantial savings by not having to pay sales tax (which varies between 4 to 30% from state to state). Oil firms however say the airline would have to pay 12.83% duty on the imported ATF (additional customs duty or CVD of 8.24% plus a 3% education cess on top of it and an additional 4% special CVD or SAD). Against this, Kingfisher presently pays only 8.24% excise duty on jet fuel purchases made from oil firms. The sources said oil PSUs also made it clear they did not have surplus infrastructure facility at any port location in India, which could be hired by Kingfisher to import ATF. Besides, the airline would either have to build its own storage tanks or hire those from oil companies for stocking the imported ATF at the ports. It would then have to make arrangements for transporting ATF to airports in trucks. Even after time and cost consuming exercise, Kingfisher can dispense the fuel into its aircraft at only three airports — Delhi, Hyderabad and Bangalore-- which allow refuelling infrastructure to be shared on "open access" basis. In rest of the airports, oil companies have the monopoly and the airline would need to negotiate and enter into specific agreements with these companies for extending their facilities on "open access". — PTI
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The purpose of this article is to demystify health Insurance portability for policyholders and help them objectively evaluate the option. 1 According to Insurance Regulatory & Development Authority (IRDA) guidelines on health insurance portability, policyholders willing to shift have to apply for portability at least 45 days before the renewal date. The objective behind the 45 day timeline is to ensure smooth information or data exchange between a previous insurer and new insurer. 2 It is advised a policyholder willing to port should evaluate multiple health products available in the market against the following key aspects: Product Features
Service Offerings
What are the committed service levels of the new insurer like fast processing of preauthorization vis-à-vis TAT of 4 hours for processing of preauthorization, cashless claims vis-à-vis mandatory requirement of initial deposit in the network hospitals that are adjusted post confirmation from the insurer, TAT to resolve complaints. 3 According to IRDA guidelines, after receipt of a portability proposal the new insurer is required to enter the details in the IRDA portal to seek information regarding previous claims within 7 working days from the existing insurer and existing insurer is required to provide the required details in 7 working days. The porting insurance company is expected to take a decision in 15 days and failing to do so; the porting insurance company ceases a right to reject the proposal. 4 The porting insurance company has a right to underwrite the proposal based on the information available in the portability form and/or information collected from the IRDA portal. The insured needs to ensure that the porting insurance firm provides a waiting period advantage, e.g., if a insured has a continuous year cover of 4 years with an existing insurance company and the porting insurer has a PED waiting period of 4 years, then the porting insurance company is not allowed to impose any waiting period. 5 Portability is also extended for product benefits. For example, if the maternity benefit is available both with an existing insurance and new insurance organization and both have a waiting period of two years, then the maternity benefit is available from day 1 after porting, if the insured has a continuous cover of two years with an existing insurance company. 6 Portability is also allowed during a grace period (which is defined by every insurer and normally varies from 15-30 days). However, any claim incurred during the grace period is not payable by both existing insurer and the insurer to whom porting proposal form has been submitted. 7 While the outcome of the acceptance of portability is still awaited, on the date of renewal the insured can request for a "short period" policy from the existing insurer for a minimum duration of 30 days and the new insurance company is expected to match the date of commencement with the date of expiry of the short period policy. 8 Cancellation is not allowed by an existing insurer unless confirmation is received from the new insurance company or the same is requested by the insurer. 9 Even after applying for Portability, the insured can decide to continue a policy with the existing insurer. The existing insurer is not allowed to impose any additional exclusions and/or waiting period in this scenario and the continuity benefits can be availed by the insured after renewal. 10 Portability shall be applicable to the sum insured including the cumulative bonus acquired from the previous insurer (if applicable). For example, in case an insured has a plan of Rs 200,000 with the current insurer and has accumulated a cumulative bonus of Rs 50,000, then an insured is eligible for a porting benefit on a sum insured of Rs 250,000. In case the porting insurer does not have a plan of Rs 250,000, the insured can opt for a plan either higher or lower than this value, however the porting benefit would be provided only for sum insured of Rs 250,000 only. 11 In case of any unforeseen circumstances wherein an insured is required to claim against any hospitalization event, the existing insurer is expected to honour the claim as per the normal process and the insured is expected to pay out the premium for the complete one year (This is applicable even if the insured has availed a "short period" policy with a difference that the premium would be calculated for the balance period). 12 The portability guidelines are applicable only for retail cover. In case an insured has a group cover, the insured has to port into a retail plan with the same insurance company and continue the cover for at least one year. The portability benefit is not available to port from a group to a retail cover across two different insurance organizations. The insurer need to ensure that while a group policy is being ported into an individual plan with the same insurer, porting benefits per member for PED or time based benefits are provided. At the time of porting a retail plan to a different insurer, the existing retail plan would be considered as a base. In case no portability benefit was ported during movement from group to retail, the insured will lose the benefit of being with an insurer for that duration. The author is head of customer support & operations, Max Bupa. The views expressed are her own |
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Expect lacklustre trading this week
The broader indices gained even more with the BSE 100, BSE 200 and BSE 500 gaining 3.02%, 3.26% and 3.44%, respectively. The BSE MidCap and BSE SmallCap were bigger gainers at 5.37% and 7.12%, respectively. After a very long time we have seen that the breadth of the market has improved significantly. More important is the fact that the retail investor has now seen his portfolio improving after a significant lapse of time. Infosys declared excellent results for the December quarter, which were better than what the street expected. The difference was the guidance in US dollar revenues for the current quarter ending March 2012, which shows an insignificant gain over the previous year. This spooked the markets and Infosys lost Rs 252 or 8.8% to close at Rs 2,586. This performance and guidance brought down the BSE IT index by 6.88% and competitor TCS down by 7.24%. The other big gainers were the BSE Metal (up 9.84%), BSE Capital (up 8.49%) and BSE Bankex (up 6.14%). The star performer was the BSE Realty that gained a staggering 13.10% led by DLF (up 11.32%) and HDIL (up 27.84%). In the metal pack almost everybody chipped in with big gains with Tata Steel up 14.58%, Hindalco up 12.93%, JSW Steel rising 12.06% and Sterlite up 9.59%. Axis Bank gained 10.33%, SBI rose 6.41% and ICICI Bank gained 6.04%. Foreign institutional investors continued to be buyers during the week with net purchases of Rs 1,733 crore while domestic institutions sold shares worth Rs 1,613 crore. After the closure of the European bourses on Friday, Standard & Poor's downgraded 9 out of 17 eurozone nations including France, Italy and Spain. The same was in the offing for a long time but the cumulative impact is likely to have some bearing on markets when they open on Monday. SEBI and the RBI announced the details for investments by QFIs (qualified foreign investors) and put at rest all doubts that had arisen that unaccounted money would flow into the country. The guidelines are quite rigid and tedious and only serious investors would opt for investment through this route. All trades by QFIs would be settled on a gross basis meaning that effectively each trade has to result in delivery. Fruits and vegetables have become cheaper and helped in bringing down inflation. Quarterly results will continue to dominate action in the market besides overseas cues. The Indian rupee strengthened during the week closing at Rs 51.52 against the US dollar - up from the Rs 52.72 in the previous weekend. The markets have gained for the last two weeks and, as mentioned above, has been quite widespread. The mood has also begun to change with sharp gains witnessed in midcap and smallcap stocks. This week therefore becomes very crucial for the markets and the momentum needs to continue for a further rally. The market needs to at least sustain itself above the 4,800 mark on the Nifty and the 16K mark on the Sensex. The Sensex has support at 16,050, then at 15,911, then at 15,802, then at 15,485 and finally at 15,223 points. It has resistance at 16,258, then at 16,382, then at 16,465, then at 16,549 and finally at 16,754 points. The Nifty has support at 4,833, then at 4,745, then at 4,695, then at 4,605 and finally at 4,555 points. It has resistance at 4,898, then at 4,945, then at 4,988, then at 5,045 and finally at 5,099 points. It is likely to be a more range bound week this time. The author is founder of KRIS, an investment advisory firm. The views expressed are his own. Market pointers
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Brussels/Berlin, Jan 15
The principal advantage of health insurance portability is that it provides the customer the flexibility to shift from the existing insurer to a new one if he/she is not satisfied with the existing insurer. However, before deciding to switch insurers, it is critical for policyholders to assess the benefits being offered by the other insurer are as per the policyholder's requirement and he/she is not moving from a bad to worse scenario.
The week ended with Friday the 13th adding steam to the market momentum spurred by the Tuesday rally. The Bombay Stock Exchange Sensex gained 305.82 points or 1.93% to close at 16,154.62 points. The National Stock Exchange gained more at 119.10 points or 2.51% to close at 4,866 points.
