New Delhi, August 18
In a bid to ensure that banks touch the lives of more Indians, Finance Minister P Chidambaram has pushed for “people friendly” measures like making ATMs receive cash, aggressive rollout of more education loans, asking banks to reduce equated monthly instalments (EMIs) on loans, doorstep banking to collect cash from markets and rescheduling of loans to farmers in drought affected areas.

After a review meeting with the chiefs of public sector banks and financial institutions, Chidambaram also said ways should be found so that an estimated Rs 11 lakh crore lying in cash with the public could be channelized into the banking system.

For this, he asked banks to double the number of ATMs from 63,000 in two years and also to upgrade them to cash accepting machines from only cash dispensing ones so that the money remains in the banking system. He also advocated doorstep banking where banks could, for instance, collect cash from different markets that keep overnight and instead deposit them with the banks.

For young people, Chidambaram asked banks to ensure education loans were easily available to deserving candidates. Directing banks to review the procedure of sanction of these loans, he added that bank officers will now be penalized if education loans are rejected without adequate reasons.

For farmers, he announced state-owned banks are geared to meet requirements of farmers in drought affected areas. Short-term loans are being rescheduled to long term loans, new loans are being provided for crops, fodder, cattle.

For the middle class, he said he asked the banks to look at reducing EMIs so that more consumer durables can be purchased and are not deferred. He cited SBI’s example which has recently cut EMIs on car loans which substantially increased its volumes.

Chidambaram said reviving the investment cycle and forwarding consumer purchases were the twin remedies for the economy and to boost manufacturing.

Maintaining that the health of the banking sector was “extremely good”, he averred: “Most of our problems will be over if we revive investments in small, medium and large industries. Market sentiment is only one factor it will change if the other issues are addressed.”

He said the chairmen of the PSU banks had pointed out some issues hindering investments, such as fuel supply agreements, delay in clearances and approvals, land acquisition and government entities like NHAI and SEBs not making payment in time, which he added would be taken up with other ministries.

On the importance of consumer purchases, Chidambaram said: “EMIs must be kept at an affordable level. That will keep the engine of manufacturing going and large industries continue to produce these goods. Suppliers of parts and accessories in the small and medium enterprises will continue to do business”.

Mumbai, August 18
Problems pertaining to land and coal availability pose a challenge for the power sector making it difficult to provide electricity at affordable rates, Tata Group chairman Ratan Tata said Saturday, and sought the government's intervention in resolving the issues.

"There are challenges which cannot be met by the private sector alone. The government will have to play an important role," Tata said at the 93rd annual general meeting of Tata Power here.

"The main fuel (for meeting the increasing energy needs) will be coal...There is a question on coal and land auction which will be the concern and has to be addressed later," he said, adding, "Availability of energy at affordable rates will be an area of challenge."

The remarks come on a day when official auditor CAG's report was tabled in Parliament saying that the national exchequer lost part of Rs 1.86 lakh crore which private firms are likely to gain because coal blocks were given to them without competitive bidding.

Rapping the government for its failure to timely implement the competitive bidding mechanism for allocation of coal blocks, CAG today said part of the Rs 1.86 lakh crore loss could have been tapped had the procedure been put in place earlier.

Tata Group companies Tata Steel and Tata Power have been named in the report among the companies which got the blocks in various states.

Ratan Tata, who is slated to retire towards the end of the year after being at the helm for over two decades, said the principle challenges for Tata Power emanate from land acquisition, environmental clearances and availability of coal.

"There’s a shortage of domestic coal and the gas is expensive. There’s a need to encourage gas-based plants through policy decision. Besides, infrastructure support such as roads, ports and railways should be in place," he added. — PTI

Q: If Gold ETFs were sold after being held for over a year and STT was not deducted, the income tax liability used to be less than 10% of gains without indexation or 20% after indexation. Does this also hold true for AY2013-14 (FY2013) or has the 10% tax without indexation been scrapped? Also, if one's income is between Rs 2 to 5 lakh (in the 10% tax slab) and he has short-term capital gains (STCG) on sale of shares through stock exchanges paying STT, does he have to pay 15% tax on STCG or, if STCG is included and income is still less than Rs 5 lakh, he has to pay 10% tax?

— S. Ramanujam

A: On listed shares and mutual fund units, the taxpayer has the option of paying long-term capital gains tax at rate of 10% on the profit (sale less cost). In other words, long-term capital gains tax is payable at the rate of 20% on long-term capital gains that results from reducing indexed cost from sale value. However, if the 10% tax calculation is lower, then the taxpayer has the option of paying the same. Gold ETFs, though purchased on the stock exchange without reducing STT, is a mutual fund unit. Therefore, the option of 10% is indeed available on Gold ETFs.

As for as your second query, tax of 15% on STCG from equity is separately payable irrespective of the tax slab one belongs to. The only relaxation is that if the entire amount of basic exemption is not exhausted, then the STCG may be adjusted against the same and the 15% tax is payable on the balance. For example, say the other general income of the taxpayer is Rs 3 lakh and STCG is Rs 1 lakh. In this case, 15% tax is payable on the STCG. However, if the other income of the taxpayer were to be say Rs 1.5 lakh (instead of Rs 3 lakh) then Rs 50,000 from the STCG may be adjusted to make up the basic exemption limit of Rs 2 lakh and 15% STCG tax is payable only on the balance Rs 50,000 of STCG.

Q: We have been receiving mails from Indian banks saying NRO funds can now be moved into NRE accounts after paying tax. What tax is being referred to? Does it suggest we can open NRE fixed deposits with NRO funds? My wife received some inheritance money from her parents. Should we keep it in a separate NRE account?

— Eswaran

A: Hitherto, funds from an NRO account could be remitted to India up to a limit of of US $1 million per fiscal. However, these funds could not be credited to the account holder's NRE account. This was illogical. And recently, the RBI has rectified this anomaly. Now, funds from the NRO account can be simply credited to one's NRE account — the paperwork for doing so is similar to that required for remitting funds abroad. Therefore, NRO to NRE account transfer can only be effected upon submission of Forms 15CA and 15CB.