New Delhi, November 28
The income tax department has decided to begin prosecution action against those having "substantial" amounts in their bank accounts in UK-based multinational banking and financial services giant HSBC’s branch in Geneva, Switzerland.

The department has now written to the finance Ministry to suggest a benchmark for funds held on the basis of which the IT department can initiate legal action for tax evasion and tax theft.

Top sources said a benchmark of about Rs 5 crore is being mulled for initiating court proceedings against those Indians whose names have figured on the secret list of HSBC’s branch in Geneva, supplied to India by the French government.

All others below the benchmark amount, the sources said, could be penalized under income tax laws and the amount can be realized from them by way of raising a comprehensive tax demand.

The sources said a number of individuals or entities who have figured in these accounts, also searched and probed by the income tax department, held small balances ranging from few thousands to hundreds of thousands of rupees and, hence, a policy has to be made as to how many will be prosecuted and how many penalized under tax theft laws.

"A policy framework will be decided and action would be taken on a case-to-case basis," the sources said.

The income tax department, through the finance ministry, has already approached Swiss revenue authorities for banking data of certain individuals after investigations showed some of them reportedly had other accounts under fictitious names.

The department has already begun a country-wide I-T assessment of those entities whose names have figured in these secret lists.

India had obtained data of over 700 HSBC accounts from French government channels last year. — PTI

Male, Maldives, Nov 28
Maldives has cancelled its biggest foreign investment project, a $511 million deal with Indian firm GMR Group to develop its international airport, raising questions over the future of foreign investment in the islands renowned for luxury resorts.

The cancellation of the deal signed in 2010 follows President Mohamed Waheed's failure to renegotiate terms, sources close to president's office have told Reuters.

GMR, a subsidiary of Bangalore-based GMR Infrastructure Ltd, has been given seven days to leave the Indian Ocean island chain.

"It is cancelled by the cabinet on the instructions of the president. It was not a valid agreement," Imad Masood, the president's spokesman told Reuters late on Tuesday.

The cancellation raises concerns over investor protection in the Maldives, which is seeking foreign financing of tourism projects, and follows a year of political turmoil, with the ousting of a president and months of unrest.

In a statement GMR said the cabinet's decision was "unilateral and completely irrational," as legal arbitration over the deal was currently in the Singapore High Court.

"We are therefore taking all measures to ensure the safety of our employees and safeguard our assets. We are confident that the stand of the company will be vindicated in every way."

The Maldives action exacerbated already strained relations with neighbouring India, which warned it would "take all necessary measures to ensure the safety and security of its interests and its nationals in the Maldives".

"The government of India would...expect that Maldives would fulfill all legal processes and requirements in accordance with the relevant contracts and agreement it has concluded with GMR in this regard," it said.

India said the move sends a "very negative signal to foreign investors and the international community".

GMR won the contract in 2010 to upgrade and operate the Maldives airport and build a new terminal after a global tender overseen by the World Bank.

The deal with the GMR was signed under former president Mohamed Nasheed's administration, following a competitive bidding process conducted by the World Bank's International Finance Corporation (IFC).

The project was implemented through a joint venture company comprising GMR Infrastructure Limited and Malaysia Airports Holding Berhad. — Reuters

Mumbai/New Delhi, Nov 28
Norway's Telenor is in talks to merge its Indian operations with Tata Teleservices to gain a bigger foothold in the world's second-biggest mobile phone market, a source with direct knowledge of the situation said.

Telenor, which won rights to operate in six Indian zones in an auction this month after its earlier permits were ordered to be revoked, is looking to take a majority stake in the merged entity, the source said.

The deal will see India's Tata Group cutting its stake in unlisted Tata Teleservices , the country's no. 6 mobile phone carrier, said the source, declining to be named due to the sensitivity of the matter.

The merged entity will be ranked no. 5 by customers.

Japan's NTT DoCoMo, which owns a 26% stake in the company, will retain its holding in the combined entity, the source said.

Telenor and Tata Teleservices declined comment. NTT DoCoMo could not immediately be reached for comment in Tokyo outside their business hours.

With more than 900 million mobile phone customers, India's mobile phone market is second only to China.

The crowded market, which boasted 15 players until the first half of this year, is ripe for consolidation, analysts have said, as competition and rising debt levels eat into profit margins. However, there have been few deals, mainly due to regulatory uncertainty and strict government rules on ownership and airwave holdings.

A cabinet decision this month determined that companies buying a carrier that paid a low state-set price for airwaves must match a far higher price determined in a recent auction and pay the difference to the government. — Reuters

New York City, November 28
US market regulator Securities & Exchange Commission on Wednesday charged four Indian brokerages — Ambit Capital, Edelweiss Financial Services, JM Financial and Motilal Oswal Securities — for violating registration rules and they have agreed to pay over US $1.8 million to settle the charges.

The officials of the brokerages could not be immediately contacted.

In a statement, the SEC said it has charged Ambit Capital Pvt Ltd, Edelweiss Financial Services Ltd, JM Financial Institutional Securities Pvt Ltd and Motilal Oswal Securities Ltd.

They were charged for "for providing brokerage services to institutional investors in the US without being registered with the SEC as required under the federal securities laws," the statement said.

Together, the four firms have "agreed to pay more than $1.8 million combined to settle the SEC's charges".

According to the regulator, these entities engaged with US investors despite being unregistered broker-dealers, in ways such as sponsored conferences in the United States, among others.

"In their respective settlements, the firms agreed to be censured while neither admitting nor denying the SEC's charges.

"Ambit agreed to pay disgorgement and prejudgment interest totaling $30,910. Edelweiss agreed to pay $568,347. JM Financial agreed to pay $443,545 and Motilal agreed to pay $821,594," the statement by the SEC added. — PTI

Chandigarh, November 28
Skyrocketing prices of gold may have slightly diminished the appeal for the yellow metal amongst Indians. But gold as an investment option, rather than for its ornamentation value, is fast gaining ground.

World Gold Council figures reveal while the demand for gold has fallen slightly this year, the percentage of people going in for investing in gold has gone up. Last year, the gold demand in India was 986 tonnes but in the first three quarters (Jan-Sept) of 2012 it has remained sluggish at 607 tonnes. By the end of the year, the demand is expected to reach just 800 tonnes. However, from 37% of those buying gold purely for investment (through physical purchase of gold and gold exchange traded funds) in 2011, the percentage of gold investors is likely to be around 40% this year.

Amresh Acharya, director-investment, World Gold Council, said the fast changing global economic environment has contributed to gold becoming one of the safest investment options. “In 2006, just 23% of gold buying in India was for investment, while 37% of gold buying in 2011 was for investment. Though physical buying of gold continues to be the most popular form of gold investment, the investments going into gold exchange traded funds is also going up. The investment in gold ETFs now is estimated at around Rs 11,500 crore,” he said, adding that the gold market in India is worth Rs 2 trillion, making it the world’s largest consumer.

Acharya was in town to launch a Gold Accumulation product along with Reliance Money Precious Metals, a subsidiary of Reliance Capital, called Reliance My Gold Plan. This plan allows customers to start accumulating gold using a daily average pricing methodology. The plan is available for a minimum subscription of Rs 1,000 per month and can be subscribed for a tenure ranging from one year to 15 years.

Acharya said the reason why gold prices had been escalating in India, in spite of a dip in global prices, was because of the sliding rupee. “Globally, the gold prices have been up because of a huge demand and supply gap, and the increased use of gold as a hedge against other investment options. The fact that the demand for gold has been high in the emerging markets, and that central banks across the world are becoming net buyers of gold, rather than sellers, has also contributed to the prices going up sharply”, he added.