Author: CS SURBHI SAXENA

About Surbhi Saxena edits the daily Current Affairs News. The author is qualified member of The Institute of Company Secretaries of India (ICSI).

Cabinet approves Loan Guarantee Scheme for Covid Affected Sectors (LGSCAS)

On account of the disruptions caused by the second wave of COVID 19 specially on healthcare sector, the Union Cabinet, chaired by the Prime Minister Shri Narendra Modi has approved Loan Guarantee Scheme for Covid Affected Sectors (LGSCAS) enabling funding to the tune of Rs. 50,000 crore to provide financial guarantee cover for brownfield expansion and greenfield projects related to health/ medical infrastructure. The Cabinet has also approved the introduction of a scheme for other sectors/lenders including those allied to better healthcare. Detailed modalities would be finalized in due course depending upon the evolving situation.

About LGSCAS:

Government has taken various measures to combat the crisis caused due to Covid-19 pandemic which has been upended by the second wave of COVID-19. This wave has placed enormous stress on health facilities as well as livelihoods and business enterprises in many sectors. This wave has sharply brought out the need to enhance public and private investments in the health sector. This is necessary across the country, from metro cities to tier V and VI towns as well as rural areas. The requirements include additional hospital beds, ICUs, diagnostic centres, oxygen facilities, telephone or internet based medical advice and supervision, testing facilities and supplies, cold chain facilities for vaccines, modem warehousing for medicines and vaccines, isolation facilities for triage, ramping up of production of ancillary supplies such as syringes and vials etc.

The proposed LGSCAS is aimed at upscaling the medical infrastructure in the country, specifically targeting underserved areas. LGSCAS would provide a guarantee of 50 percent for brownfield projects and 75 percent to greenfield projects for loans sanctioned up to Rs.100 crore, set up at urban or rural locations other than 8 Metropolitan Tier 1 cities (Class X cities). For aspirational districts, the guarantee cover for both brownfield expansion and greenfield projects shall be 75%.

The LGSCAS has been formulated as a specific response to an exceptional situation the country has witnessed due to lack of adequate health infrastructure in the light of the second wave of Covid-19. The approved scheme is expected to help the country in shoring up its much-needed healthcare infrastructure along with creating more employment opportunities. The main objective of LGSCAS is to partially mitigate credit risk (primarily construction risk) and facilitate bank credit at lower rates of interest. The Scheme would be applicable to all eligible loans sanctioned up to 31.03.2022, or till an amount of Rs. 50,000 crore is sanctioned, whichever is earlier.

Cabinet approves extension of last date of Registration under Aatmanirbhar Bharat Rojgar Yojana (ABRY)

The Union Cabinet, chaired by the Prime Minister Shri Narendra Modi has given its approval for extending the terminal date for registration of beneficiaries for availing the benefit under Aatmanirbhar Bharat Rojgar Yojana (ABRY) for another nine months i.e. from 30th June, 2021 to 31st March, 2022. Consequent upon this extension, it is expected that 71.8 lakh employment will be generated in the formal sector as against the earlier projection of 58.5 lakh. As on 18.06.2021, benefit amounting to Rs.902 crore has been given to 21.42 Lakh beneficiaries through 79,577 establishments under ABRY.

Estimated expenditure of the scheme including the expenditure for the proposed extended period of registration upto 31.03.2020 will be Rs.22,098 crore. This scheme is being implemented through the Employees Provident Fund Organization (EPFO) to reduce financial burden of the employers of various sectors/industries and to encourage them to hire more workers.

Under ABRY, establishments registered with EPFO and their new employees drawing monthly wage of less than Rs. 15,000/- are being benefited if the establishment recruits new employees or those who lost their job between 01.03.2020 to 30.09.2020. Under ABRY, Government of India is crediting for a period of two years both the employees’ and employers share’ (24% of wages) or only the employees’ share (12% of wages), depending on the strength of EPFO registered establishments. Detailed scheme guidelines can be seen on the website of Ministry of Labour & Employment and EPFO.

 ABRY was announced as one of the measures under Aatmanirbhar Bharat 3.0 package to boost the economy and increase employment generation in formal sector during post Covid recovery phase. This scheme will minimize the impact of COVID-19 pandemic on the country’s economy and will ameliorate the hardship faced by low paid workers, provide incentive to employers for restarting and expanding business activities.

 

SBI authorised to issue and encash Electoral Bearer Bond 2018 through its authorised branches

The Government of India has notified the Electoral Bond Scheme 2018 vide Gazette Notification No. 20 dated 02nd January 2018. As per provisions of the Scheme, Electoral Bonds may be purchased by a person (as defined in item No. 2 (d) of Gazette Notification), who is a citizen of India or incorporated or established in India. A person being an individual can buy Electoral Bonds, either singly or jointly with other individuals. Only the Political Parties registered under Section 29A of the Representation of the People Act, 1951 (43 of 1951) and which secured not less than one percent of the votes polled in the last General Election to the House of the People or the Legislative Assembly of the State, shall be eligible to receive the Electoral Bonds. The Electoral Bonds shall be encashed by an eligible Political Party only through a Bank account with the Authorized Bank.

State Bank of India (SBI), in the XVII Phase of sale, has been authorised to issue and encash Electoral Bonds through its 29 Authorized Branches ( as per list enclosed)  w.e.f. 01.07.2021 to 10.07.2021.

The Electoral Bonds shall be valid for fifteen calendar days from the date of issue and no payment shall be made to any payee Political Party if the Electoral Bond is deposited after expiry of the validity period. The Electoral Bond deposited by an eligible Political Party in its account shall be credited on the same day.  

Click here for Electoral Bond Scheme 2018 annexure

 

Stimulus package of Rs 6,28,993 crore announced by Union Minister for Finance Smt. Nirmala Sitharaman

A  1.1 Lakh Cr Loan Guarantee Scheme for COVID Affected Sectors

Health Sector: Rs. 50,000 crore

  • Aimed at scaling medical infrastructure targeting underserved areas.
  • Guarantee cover for expansion and new projects related to health/medical infrastructure in cities other than 8 metropolitan cities. The Guarantee coverage is 50% for expansion & 75% for new projects and for Aspirational Districts, guarantee cover of 75% for both new projects and expansion. 
  • Maximum loan is of Rs. 100 crore; Guarantee duration: Up to 3 years  with Interest rate capped at 7.95% 
  • Guarantee by National Credit Guarantee Trustee Company Limited.

 Other Sectors: Rs. 60,000 crore

  • Interest rate capped at 8.25% p.a. 
  • Decisions at a later stage based on evolving needs. Normal interest without guarantee cover is 10-11% 

B Additional 1.5 lakh Cr for Emergency Credit Line Guarantee Scheme:

Launched as part of Atma Nirbhar Bharat Package in May, 2020. ECLGS-1.0, 2.0 and 3.0 have resulted in credit disbursal of 2.69 lakh Crore to 1.1 crore units by 12 Public Sector Banks, 25 Private Sector Banks, and 31 Non Banking Financial Companies. Contact intensive sectors already covered and shall be continued. So far,  Rs 4,000 crore has been given to these sectors through this window. 

Limit of admissible guarantee and loan amount proposed to be increased above existing level of 20% of outstanding on each loan. Sector wise details will be finalized as per evolving needs. The Overall cap of admissible guarantee to be raised from Rs. 3 lakh crore to Rs. 4.5 lakh crore.

C Credit Guarantee Scheme to Facilitate Loans to 25 Lakh Persons Through Micro Finance Institutions (MFIs):

Guarantee will be provided to Scheduled Commercial Banks for loans to new or existing NBFC-MFIs or MFIs for on lending upto Rs 1.25 lakh to approximately 25 lakh small borrowers. The Interest Rate on Loans from banks to be capped at MCLR plus 2% and Maximum loan tenure is 3 years, 80% of assistance to be used by MFI for incremental lending, interest at least 2% below maximum rate prescribed by RBI 

Focus on new lending, not repayment of old loans. Loans to borrowers to be in line with extant RBI guidelines such as number of lenders, borrower to be member of JLG, ceiling on household income & debt.

All borrowers (including defaulters upto 89 days) eligible. The Guarantee cover for funding provided by MLIs to MFIs/NBFC-MFIs till March 31, 2022 or till guarantees for an amount of Rs.7,500 crore are issued, whichever is earlier. Guarantee upto 75% of default amount for upto 3 years through National Credit Guarantee Trustee Company (NCGTC)  and No guarantee fee to be charged by NCGTC.

D. Extension of Atmanirbhar Bharat Rozgar Yojana:

The Scheme was Launched on 1st Oct, 2020 for  Incentivizing employers for creation of new employment, restoration of loss of employment through EPFO. Approved outlay Rs. 22,810 crore for 58.50 lakh estimated beneficiaries. Last date for registration is 30.06.2021.

Subsidy provided for two years from registration for new employees drawing monthly wages less than Rs. 15000 for:

  1. Both Employer’s and Employee’s share of contribution (total 24% of wages) for establishment strength upto 1000 employees.
  2. Only Employee’s share (12% of wages) in case of establishment strength of more than 1000

Benefit of Rs. 902 Cr given to 21.42 lakh beneficiaries of 79,577 establishments till 18.06.2021. The Scheme extended from 30.6.2021 to 31.03.2022.

E. Additional Subsidy for DAP & P&K fertilizers (Announced Earlier):

Record procurement of 432.48 Lakh MT of wheat in Rabi Marketing Season (RMS) 2021-22 (against 389.92 Lakh MT in RMS 2020-21). Rs 85,413 Crore paid to farmers. Existing NBS subsidy was Rs.27,500 crores in FY 2020-21 which has been increased to Rs. 42,275 crore in FY 2021-22 • Additional amount of Rs.14,775 crore to be provided. This includes Rs.9,125 crore additional subsidy for DAP and Rs.5,650 crore additional subsidy for NPK based complex fertilizer.

F. Extension of Pradhan Mantri Gareeb Kalyan Anna Yojana (PMGKAY) (Announced Earlier):

PMGKAY was launched on 26th March 2020 to ameliorate the hardships faced by the poor due to economic disruption caused by COVID 19 Pandemic. The scheme was launched initially for the period from April to June 2020. However, keeping in view the need for continuous support to the poor and the needy, the scheme was extended till November 2020. The total cost of the scheme in 2020-21 was Rs. 133,972 crore. In the wake of the second wave of COVID-19, the scheme was relaunched in May 2021 to ensure food security of the poor/vulnerable. 5 kg of food grains will be provided free of cost to NFSA beneficiaries from May to November 2021 • Estimated financial implications are Rs 93,869 cr, bringing the total cost of PMGKY to Rs 2,27,841 Crore.

 

Click here for the Presentation

Announcements By Finance Minister: Economic Package for Travel Sector and Tourism

  • Reviving Tourism:- Under new Loan Guarantee Scheme for COVID Affected Sectors, working capital/personal loans will be provided to people in the tourism sector to discharge liabilities and restart businesses impacted due to Covid-19. The scheme will cover:
  • 10,700 regional level tourist guides recognized by the Ministry of Tourism and tourist guides recognized by the State Governments.
  • Travel and Tourism Stakeholders (TTS) recognized by the Ministry of Tourism.
  • Loan will be provided with 100% guarantee, up to the following limits: Rs 10 Lakh for TTS per agency and Rs 1 Lakh for tourists guides licensed at Regional or State Level.
  • No processing charges, waiver of foreclosure/prepayment charges. No additional collateral requirement.
  • Scheme to be administered by the Ministry of Tourism through NCGTC.
  • Free Tourist Visa to 5 Lakh Tourists:- 
  • Once Visa issuance is restarted, the first 5 lakh Tourists Visa will be issued free of charge.
  • Benefits will be available only once per tourist.
  • The scheme will be applicable till 31st March 2022, or till 5,00,000 visas are issued, whichever is earlier.
  • Total Financial Implication is of Rs 100 Crore.

S&P cuts India’s Growth Forecast to 9.5% from 11% for FY 2022

S&P Global Ratings cut India’s FY22 growth forecast for the current fiscal to 9.5 per cent, from 11 per cent earlier, and warned of the risk to the outlook from further waves of COVID pandemic. The agency lowered the growth outlook due to severe second COVID-19 outbreak in April and May which led to lockdowns imposed by states and a sharp contraction in economic activity. It also projected India’s growth at 7.8 percent for the next fiscal ending March 31, 2023. 

‘itat e-dwar’, an e-filing portal of Income Tax Appellate Tribunal launched

Shri Ravi Shankar Prasad, Union Minister for Law & Justice, Communications and Electronics & IT, formally launched the e-filing portal of Income Tax Appellate Tribunal (ITAT), ‘itat e-dwar’,on the 25 June 2021 in New Delhi. The newly developed e-Filing Portal would enable the parties to file their Appeals, Miscellaneous Applications, documents, paper books, etc., electronically. 

The Minister detailed how during the pandemic and the lockdown that ensued the Judiciary functioned through digital means and heard more than one crore cases.  He stated that data about more than 18 crore cases are available in the National Judicial Data Grid (NJDG) and he suggested that cases of ITAT should also be integrated in the NJDG. He pointed out that VC facility has been provided in more than 800 jails so that the undertrials are able to appear before the Courts without the police having to bring them physically to the courts.

He further cautioned that this initiative of ITAT must not be seen as a solitary step.  Instead, it should be seen as a larger narrative of transformation that the country is undergoing through digital medium.  It enables innovation and empowerment and opens new avenues for growth.  He expressed hope that ‘itat e-dwar’ will be widely accepted by the lawyers and tax litigants alike.

On this occasion, a virtual function was organized at the national level which was attended by the functionaries of ITAT from all the 28 stations.  The members of various Bar Associations also joined the virtual function.  It was also attended by the Officers of the Income Tax Department, Chartered Accountants, Taxpayers and other legal luminaries in the field of tax, from across the country.

Justice P.P. Bhatt, President of ITAT, on this occasion, informed the gathering that the launch of e-Filing Portal ‘itat e-dwar’ will enhance the accessibility, accountability and transparency in the day to day working of the ITAT.  It would not only result in economization of the use of paper, savings in costs but also rationalization of the fixation of cases leading to quicker disposal of cases.  On this occasion, Justice Bhatt also announced a plan to set up paperless courts in the ITAT with a pilot project being undertaken at Delhi Benches of ITAT.  It was also informed that even during the period of Pandemic, by using the tools of information and communication technology, various benches of ITAT have functioned and kept up its activity of judicial dispensation.  It was revealed that in spite of the restricted functioning of Benches, the adoption of Video Conferencing has brought down the pendency of cases to about 64,500 as against 88,000 on 1st April, 2020.

On this occasion, Shri Anoop Kumar Mendiratta, Union Law Secretary also addressed and congratulated the ITAT for the initiative taken by it developing the new e-Filing Portal.  Shri G.S. Pannu, Vice President (Delhi Zone) and Chairman, Computerization Committee, ITAT explained that with the combination of digital court room, virtual hearings and Mobile Application providing Judicial Information, paperless courts will soon be a reality in ITAT.

RBI extends PMC Bank Limited restrictions till 31st December, 2021

In response to the Expression of Interest (EOI) dated November 3, 2020 floated by PMC Bank for its reconstruction, certain proposals were received. After careful consideration, by RBI the proposal from Centrum Financial Services Ltd. (CFSL) along with Resilient Innovation Pvt. Ltd. it has been found to be prima facie feasible. Accordingly, in specific pursuance to their offer dated February 1, 2021 in response to the EOI, RBI has, on June 18, 2021, granted “in-principle” approval, valid for 120 days, to CFSL to set up a small finance bank (SFB) under the general Guidelines for ‘on tap’ Licensing of Small Finance Banks in the Private Sector dated December 5, 2019.

Taking into account the time required for completion of various activities involved in the process, Reserve Bank of India extended the aforesaid Directions. Accordingly, RBI notified for the information of the public that the validity of the aforesaid Directive dated September 23, 2019, as modified from time to time, has been extended for a further period from July 1, 2021 to December 31, 2021, subject to review. All other terms and conditions of the Directives under reference shall remain unchanged.

 It is to be noted that, Punjab and Maharashtra Cooperative (PMC) Bank Limited,  Mumbai, Maharashtra, a Multi-State Urban Cooperative Bank was placed under All-Inclusive Directions under Sub-section (1) of Section 35-A read with Section 56 of the Banking Regulation Act, 1949 with effect from close of business on September 23, 2019 vide Directive DCBS.CO.BSD-I/D-1/12.22.183/2019-20 dated September 23, 2019, in the interest of depositor protection. The directions were last extended vide Directive dated March 26, 2021 up to June 30, 2021.

Acquisition of Zuarinagar plant of Zuari Agro Chemicals Limited by Paradeep Phosphates Limited gets CCI approval

The Competition Commission of India (CCI) approves acquisition of the Zuarinagar plant of Zuari Agro Chemicals Limited by Paradeep Phosphates Limited.

The proposed combination envisages acquisition of the Zuarinagar, Goa plant of Zuari Agro Chemicals Limited (ZACL) by Paradeep Phosphates Limited (PPL). As a result of the acquisition, PPL shall acquire business of developing and manufacturing urea and non-urea fertiliser products presently being carried out by ZACL at the Zuarinagar, Goa Plant

PPL, part of the Adventz Group, is engaged mainly in the manufacture and sale of non-Urea fertilizers, namely, di-ammonium phosphate (DAP) and NPK fertilizers. It also imports and sells Muriate of Potash (MoP).

ZACL, a public listed company, is also a part of the Adventz Group. It is primarily engaged in the development and manufacturing of fertilizers in India. It has manufacturing facilities at Zuarinagar, Goa where it produces Urea and non-Urea fertilizers.

Detailed order of the CCI will follow.

Public Debt Management report for the quarter of January March 2021released

During Quarter 4 of FY21, the Central Government issued dated securities worth Rs 3,20,349 crore as against Rs 76,000 crore in Q4 of FY20, while repayments were at Rs 29,145 crore. The weighted average yield of primary issuances increased to 5.80 per cent in Q4 FY21 from 5.68 percent in Q3 of FY21. The weighted average maturity of new issuances of dated securities was lower at 13.36 years in Q4 of FY21 as compared to 14.96 years in Q3 of FY21. 

During January – March 2021, the Central Government did not raise any amount through the Cash Management Bills. The Reserve Bank conducted nine special and normal Open Market Operations involving simultaneous purchase and sale of government securities during the quarter. The net daily average liquidity absorption by RBI under Liquidity Adjustment Facility (LAF) including Marginal Standing Facility and Special Liquidity Facility was at Rs 3,35,651 crore during the quarter.

Total liabilities (including liabilities under the ‘Public Account’) of the Government, as per provisional data, increased to Rs 1,16,21,781 crore at end-March 2021 from Rs 1,09,26,322 crore at  end-December 2020. This represented a quarter-on-quarter increase of 6.36 percent in Q4 FY21. Public debt accounted for 88.10 per cent of total outstanding liabilities at end-March 2021. Nearly 29.33 per cent of the outstanding dated securities had a residual maturity of less than 5 years. The ownership pattern indicates the share of commercial banks at 37.8 percent and at 25.3 percent for insurance companies at end- March 2021.

The yields on Government securities hardened in the secondary market due to increase in supply of G-secs during the quarter. Further, hardening of yields was more on the short end of the curve due to increase in weekly borrowing and also announcement of resumption of normal liquidity operations by the Reserve Bank. However, the yields were supported by decision of MPC meetings held on 5th February, 2021, wherein MPC kept the Policy repo rate unchanged at 4 percent and reiterated to continue with accommodative stance, at least during the current financial year and into the next financial year – to revive growth on a durable basis and mitigate the impact of COVID-19 pandemic on the economy, while ensuring that inflation remains within the target going forward.

Since April-June (Q1) 2010-11, Public Debt Management Cell (PDMC), Budget Division, Department of Economic Affairs, Ministry of Finance, has been bringing out a quarterly report on debt management on a regular basis. 

CLICK HERE to access the report

Jamsetji Tata tops EdelGive Hurun Philanthropists of the Century list

Jamsetji Nusserwanji Tata, Indian pioneer industrialist and founder of the Tata Group, has topped the inaugural, EdelGive Hurun Philanthropists of the Century list, which ranks the world’s 50 most generous individuals in the last century.

As per the report, the total donations made by Mumbai-based Jamsetji Tata is estimated at US$102.4 billion. He is the only Indian among the top 10 list, compiled by Hurun Research and EdelGive Foundation. Azim Premji, former chairman of Wipro ranked at 12th position. Other top Philanthropists are as follows: Bill Gates & Melinda French Gates ranked second with donations worth $74.6 billion. They are followed by Henry Wellcome  with a donation of worth $56.7 billion, Howard Hughes with a donation of worth $38.6 billion, and Warren Buffett with a donation of worth $37.4 billion respectively.

 

Union Finance Minister addresses US-India Strategic Partnership Forum (USISPF) Board of Directors Investment Roundtable

The Union Minister for Finance & Corporate Affairs Smt. Nirmala Sitharaman on Thursday participated in the Global Investors Roundtable organised by the US-India Strategic Partnership Forum (USISPF) through video conferencing which witnessed participation from some of the largest foreign investors, including Mastercard, MetLife, Prudential, Air Products, Dell, SoftBank and Warburg Pincus amongst others.  

The event provided investors with an opportunity to engage with the Union Finance Minister and senior officials of Indian Government to discuss potential investment opportunities and deliberate on the role of ongoing policy reforms that will enable greater Ease-of-Doing-Business in India.    

She discussed India’s opportunities for growth and investment pertaining to India’s wide-ranging reforms which continues to position the country as an attractive destination for foreign investors. The Finance Minister remarked that macroeconomic stability, infrastructure-led economic growth opportunities, financial sector reforms, and positioning as a strong player in global supply chains are just some of the ways India continues to rise as a global economic powerhouse. 

The broad messages conveyed to the investors were with respect to significant drop in new COVID infections in the country and decline of second wave. Strong Relief and Reforms undertaken by the Government during the pandemic times. Continued macro-economic stability and resilience in economic recovery in the recent months. Vision to make India Self-Reliant (Aatma Nirbhar Bharat). Steps taken for Infrastructure led economic growth. Creating multi-sectoral opportunities for investors. Strong track record of reform implementation in the last 6 years. Other strengths/advantages of India as an investment destination. Opportunities for investment in Climate, ESG and Sustainability focused investments.

In her concluding remarks, the Minister spoke about going ahead with an overall vision to build a self-reliant modern India driven by 5 “I’s” viz. 

  1. Intent.
  2. Inclusion
  3. Investment
  4. Infrastructure and 
  5. Innovation. 

The Finance Minister stated that the country is committed to a long term relationship with US investors and proposes to meet twice yearly. She focused that the continuous reforms make India a great place to do business. Covid and its aftermath has shown Indian economy’s resilience. With the highest ever GST collections shows the bright spot-More formalisation of economy and tax compliance. Innovation and R & D have great potential and new opportunities emerging for foreign investors with recent FDI reforms, privatisation policy and PLI scheme. Fiscal situation is under control and expected to improve further and 15 new unicorns in the first 5 years of 2021 itself reflecting the growing startup ecosystem to be amongst the best in the world. 

Economic affairs Secretary Shri Ajay Seth highlighted the broad themes of Budget 2021 and how changes made are far reaching and set the tone of interactive discussion that followed. 

It is to be noted that, the US-India Strategic Partnership Forum (USISPF) is a non-profit organization, with the primary objective of strengthening the India-US bilateral and strategic partnership through policy advocacy in the fields of economic growth, entrepreneurship, employment-creation, and innovation.

IFSCA constitutes a committee for development of avenues for Ship Financing and Leasing

International Financial Services Centres Authority (IFSCA) has constituted a committee to examine global best practices in ship financing and leasing, identify opportunities and devise a roadmap to enable such activities from GIFT IFSC. This committee will be chaired by Ms. Vandana Aggarwal, former Senior Economic Advisor, Government of India. The committee includes representatives from the Government of India, Gujarat Maritime Board and industry experts possessing domain knowledge.

The committee is mandated to examine the existing legal, regulatory, tax and other applicable frameworks, identify the bottlenecks pertaining to ship financing & leasing and recommend specific measures required which shall enable ship financing & leasing from IFSC at par with best international practices. The committee would submit its recommendations to IFSCA in three months.

The constitution of the committee can be accessed through the following weblink: https://ifsca.gov.in/IFSCACommittees 

It is to be noted, India is strategically located on the world’s shipping routes and has a large coastline of approximately 7,500 km. India also has 12 major and over 200 minor ports. Data from the Ministry of Shipping suggests that 95% of India’s trading by volume and 70% by value is done via maritime transport. In Spite of significant exposure to Shipping, India is yet to develop as an international shipping hub. IFSCA aims to provide an enabling regulatory framework and facilitative environment so that GIFT IFSC can become an international hub for Ship Financing & Leasing activities thereby benefiting shipowners, lessors, carriers, ship operators, ship management companies and other stakeholders in the maritime ecosystem.

Reliance 44th AGM 2021 Key Announcements

Reliance Chairman Mukesh Ambani made major announcements during the 44th Annual General Meeting (AGM). Here are the key highlights:

  • Mr. Yasir Al-Rumayyan joins Reliance Board:

Mr. Yasir Al-Rumayyan, Chairman of Saudi Aramco and Governor PIF joins Reliance board as an independent director, while YP Trivedi retires from Reliance board. Mr Mukesh Ambani said, to achieve accelerated growth, Reliance looks forward to adding Saudi Aramco as strategic partnership in Oil to Chemical business. The Aramco-RIL partnership will be formalized this year, with more updates awaited. He said, this is the beginning of the internationalisation of Reliance, you will hear more about our international plans in the times to come. 

  • 5G partnership:

Google Cloud and Jio announce 5G partnership, laying foundation for India’s digitisation. Jio will use Google Cloud’s technology to power Jio’s 5G solutions. Reliance has tested Jio 5G solutions in India and demonstrated speeds of up to 1GBPS. Mr Mukesh Ambani said, Jio is not just working to make India 2G-mukt, but also 5G-yukt. Entire 5G standalone network has been installed in RIL data centres and trial sites in Navi Mumbai. He said he is confident of being the first to launch a full-fledged 5G service in India. He further said of Creating 100% owned intellectual property in 5G, AI/ML, blockchain, and mixed reality. 

  • JioPhone Next:

Mukesh Ambani says, Google and Jio announce JioPhone Next; a fully featured android smartphone.  JioPhone Next will be available from 10th September this year. JioPhone Next is an ultra affordable smartphone. 

  • New Energy business:

RIL launches a new energy business and creates Dhirubhai Ambani Green Energy Giga Complex. The overall initial investment in the new energy business will be Rs 75,000 crore.

Reliance New Energy Council established which is partnering with leading universities and tech companies. Four Giga Factories announced: Integrated solar photovoltaic module factory – production of solar energy; Advanced every storage battery factory – Storage of intermittent energy; Electrolyser factory Production of green hydrogen; Fuel cell factory – Converting hydrogen into mobile & stationary power.

India will play a leading role in transform the global energy landscape by growing sustainable business and providing leaderships. Repurposing existing assets to create a sustainable economic environment; multi decade growth plan.

  • Retail:

Mr Ambani said, Reliance Retail has not only protected jobs, but also created over 65,000 new jobs. “Reliance Retail is on a hyper-growth trajectory to grow at least 3x in the next 3-5 years”. He highlighted five key steps to deepen its retail arm: Establishing research design centres; further strengthening the value ecosystem; building state of the art supply chain infra; renewed focus on consumers; and continuing to acquire businesseses.

Further announcements include, the oil-to-telecom conglomerate announced Google’s Rs 33,737 crore investment for 7.7% stake in Jio Platforms, the delay in the Saudi Aramco deal, and RIL becoming debt-free ahead of target with India’s largest rights issue.

Search conducted by Income Tax Department in Raipur

Specific actionable intelligence was received by the Income Tax Department that a set of people were to carry out an outside-the-books cash transaction of a substantial amount at Raipur, Chhattisgarh. Upon further investigations, the input was found to be credible and the hawala dealer was identified.

As a result, the Department carried out search and seizure action on 21.06.2021 on a Raipur based hawala operator. Four premises at Raipur were covered in the action. The modus operandi involved not only giving accommodation entries of sale, purchase etc to people, but also transportation and end-use facilitation of unaccounted money.

During the course of the search, unaccounted cash amounting to approximately Rupees 6 crore has been seized. A number of digital devices in the form of a computer hard disc and pen drives having details of hawala transactions have been seized. The same are being analysed and quantification of the total amount involved is under progress. Preliminary estimates suggest that hawala transactions exceeding Rupees 100 crore may be involved.

 Further investigations are in progress.

 

Government of India signs $32 million loan with World Bank

The Government of India, Government of Mizoram and the World Bank have signed a $32 million Mizoram Health Systems Strengthening Project to improve management capacity and quality of health services in Mizoram, particularly for the benefit of under-served areas and vulnerable groups.

The project will strengthen the governance and the management structure of the Department of Health and Family Welfare (DoHFW) and its subsidiaries, improve the quality and coverage of services delivered by the state government health systems, and invest in a comprehensive Quality Assurance program which would enable quality certification of health facilities.

A key focus will be to strengthen the effectiveness of the state health insurance programme; build synergies with the Government of India’s Pradhan Mantri Jan Arogya Yojna (PMJAY); and thereby reduce financial barriers in accessing hospital services, prevent catastrophic out of pocket expenditure for health by poor families and expand coverage.

The Mizoram Health Systems Strengthening Project will benefit the people across all eight districts of the state. It will also benefit health sector staff, specifically at the secondary and primary levels, by strengthening their planning and management capacity along with building their clinical skills and competencies.

As a key strategy, the project will move towards a performance-based financing system where Internal Performance Agreements (IPAs) between the DoHFW and its subsidiaries would foster more accountability at all levels. This is expected to go a long way in improving the management of the system to deliver quality health services. The project will also focus on promoting synergy between various schemes and augment the capacity of the state insurance agency.

The project will invest in infection prevention and control for a more resilient response to future outbreaks, pandemics, and health emergencies. The project will also invest in improving the overall ecosystem for bio-medical waste management (both solid and liquid waste). It will include segregation, disinfection, and collection while safeguarding the environment and improving the quality of health service and patient safety.

SARFAESI ACT, 2002- Applicability, Objectives

What is SARFAESI ACT?

Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, is also known as SARFAESI, Act. It is a law which allows banks and financial institutions to auction residential or commercial properties to recover their unpaid loan. 

Narasimham Committee I and II and Andhyarujina committee were formed to examine banking sector reforms which have considered the need for changes in the legal system in respect of these areas. Committees suggested new legislation for Securitization and empowering banks and financial institutions to gain possession of the securities and to sell them without any intervention of the court. 

Applicability Of SARFAESI Act, 2002

The amendment to this Act is “an act to regulate securitization and reconstruction of financial assets and enforcement of security interest and to provide for a central database of security interests created on property rights, and for matters connected therewith or incidental thereto.” The Act deals with the following:

  • Registration and regulation of Asset Reconstruction Companies (ARCs) by the Reserve Bank of India.
  • Facilitating securitization of financial assets of banks and financial institutions with or without the benefit of underlying securities.
  • Promotion of seamless transferability of financial assets by the ARC to acquire financial assets of banks and financial institutions through the issuance of debentures or bonds or any other security as a debenture.
  • Entrusting the Asset Reconstruction Companies to raise funds by issue of security receipts to qualified buyers.
  • Facilitating the reconstruction of financial assets which are acquired while exercising powers of enforcement of securities or change of management or other powers which are proposed to be conferred on the banks and financial institutions.
  • Presentation of any securitization company or asset reconstruction company registered with the Reserve Bank of India as a public financial institution.
  • Defining ‘security interest’ to be any type of security including mortgage and change on immovable properties given for due repayment of any financial assistance given by any bank or financial institution.
  • Classification of the borrower’s account as a non-performing asset in accordance with the directions given or under guidelines issued by the Reserve Bank of India from time to time.
  • The officers authorized will exercise the rights of a secured creditor in this behalf in accordance with the rules made by the Central Government.
  • An appeal against the action of any bank or financial institution to the concerned Debts Recovery Tribunal and a second appeal to the Appellate Debts Recovery Tribunal.
  • The Central Government may set up or cause to be set up a Central Registry for the purpose of registration of transactions relating to securitization, asset reconstruction and creation of the security interest.
  • Application of the proposed legislation initially to banks and financial institutions and empowerment of the Central Government to extend the application of the proposed legislation to non-banking financial companies and other entities.
  • Non-application of the proposed legislation to security interests in agricultural lands, loans less than rupees one lakh and cases where eighty per cent, of the loans, is repaid by the borrower

Objectives behind SARFAESI Act:

1.To enable banks and other financial institutions to recover their non-performing assets (NPAs) efficiently and in a timely manner.

2.Banks and financial institutions could recover their unpaid loan amount or losses from borrowers by auctioning their assets, if borrowers failed to pay their loans.

Role of SARFAESI Act:

  1. To acquire financial assets by issuing debentures or bonds or by agreement. Realize the same and redeem the security receipts issued to the QBs.
  2. Reconstruction of financial assets by measures management, sale, debt restructuring, and settlement in a proper way or takes possession of the assets which is subject to RBI’s guidelines.
  3. Enforcing security Interest by the secured creditors without the intervention of the court. 
  4. It also acts as an agent of banks or financial institutions for recovery of unpaid loans, acts as manager of the secured assets

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According to UN Report India was fifth largest recipient of FDI in 2020

As per the World Investment Report 2021 by the UN Conference on Trade and Development (UNCTAD), India was the fifth-largest recipient of Foreign Direct Investment (FDI) inflows in the world in 2020. The country received USD 64 billion FDI in 2020, which is an increase of 27 per cent, over USD 51 billion inflows in 2019.

The United States remained the largest recipient of FDI, although, the FDI inflow to the country decreased by 40 per cent, to $156 billion, in 2020. China was the second-largest recipient with USD 149 billion FDI. The global FDI flows decreased by 35 per cent in 2020 to USD 1 trillion from USD 1.5 trillion in 2019.

India attracted total FDI inflow of US$ 6.24 billion during April, 2021

Measures taken by the Government on the fronts of Foreign Direct Investment (FDI) policy reforms, investment facilitation and ease of doing business have resulted in increased FDI inflows into the country. 

India has attracted total FDI inflow of US$ 6.24 billion during April, 2021and it is 38% higher as compared to April, 2020 (US$4.53 billion). During April, 2021 FDI Equity inflows amounting to US$ 4.44 billion were reported in the country which is an increase of 60% over the FDI Equity inflow of April, 2020 (US$ 2.77 billion). During April, 2021,Mauritius is the top investing country with 24% of the FDI Equity inflows, followed by Singapore (21%) and Japan (11%).

Computer Software & Hardware’ has emerged as the top sector during April, 2021 with around 24%share of the total FDI Equity inflow followed by Services Sector (23%) and Education Sector (8%) respectively. Karnataka is the top recipient state during April, 2021 with 31% share of the total FDI Equity inflows, followed by Maharashtra (19%) and Delhi (15%). 

Tax Inspectors Without Borders (TIWB) programme launched in Bhutan in partnership with India

Tax Inspectors Without Borders (TIWB), a joint initiative of the United Nations Development Programme (UNDP) and the Organisation for Economic Cooperation and Development (OECD), launched its programme in Bhutan today. India was chosen as the Partner Jurisdiction and has provided the Tax Expert for this programme.

This programme is expected to be of about 24 months’ duration through which India in collaboration with the UNDP and the TIWB Secretariat aims to aid Bhutan in strengthening its tax administration by transferring technical know-how and skills to its tax auditors, and through sharing of best audit practices. The focus of the programme will be in the area of International Taxation and Transfer Pricing.

Shri J.B. Mohapatra, Chairman of the Central Board of Direct Taxes (CBDT) attended the launch through videoconferencing along with Mr. Nipud Gyeltshen, the Officiating Director General, Department of Revenue & Customs, Bhutan; Ms. Rusudan Kemularia, Head of the TIWB Secretariat; and other senior officers from Bhutan, UNDP, OECD, TIWB Secretariat and Foreign Tax & Tax Research Division of CBDT.

ITAT Agra Bench: No tax on cash deposits made by housewives during demonetization 2016

The Income Tax Appellate Tribunal (ITAT), Agra bench consisting of Judicial Member Lalit Kumar and the Accountant Member Dr Mitha Lal Meena has ruled that cash deposit made by the housewives during the demonetization scheme 2016, cannot be subject to addition if such deposits are below Rs 2.5 lakh and such amount shall not be treated as income of the assessee.

The Tribunal was considering an appeal filed by a housewife, the assessee who deposited the cash of Rs 2,11,500 in the bank account during the demonetization period. It was the case of the assessee that she had collected/saved the above-said sum from her previous saving, given by her husband, son, relatives for the purposes of her and her family’s future.

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IndusInd Bank launches “IndusEasy Credit” a digital lending platform

IndusInd Bank launches “IndusEasy Credit” a digital lending platform

IndusInd Bank launched ‘IndusEasy Credit’, a comprehensive digital lending platform that enables customers to meet their financial requirements from the comfort of their homes. With this, both existing, as well as non-IndusInd Bank customers, can instantly avail of personal loans or credit cards on a single platform in a completely paperless and digital manner.

A first of its kind proposition, ‘IndusEasyCredit’ offers a fully digital end to end process that leverages the power of India’s public digital infrastructure – ‘Indiastack’ to offer personal loans and credit cards in a paperless, presence less and cashless manner.

Cabinet approves additional foodgrain to NFSA beneficiaries under Pradhan Mantri Garib Kalyan Yojana (Phase IV) – for another period of Five months

The Union Cabinet has approved allocation of additional foodgrain under Pradhan Mantri Garib Kalyan Yojana (Phase IV) – for another period of 5 months i.e. July to November, 2021 @ 5 kg per person per month free of cost for maximum 81.35 Crore beneficiaries covered under National Food Security Act (NFSA) (Antyodaya Anna Yojana and Priority Households) including those covered under Direct Benefit Transfer (DBT).

The sanction of the additional food-grain free of cost to a maximum of 81.35 crore individuals under TPDS @ 5 kg per person per month for five months would entail an estimated food subsidy of Rs.64,031 crore.  As Government of India is bearing the entire expenditure towards this Scheme without any contribution by States/UTs, an additional expenditure of about Rs.3,234.85 crore would be required to be met towards transportation and handling and FPS dealers’ margins etc. by Government of India.  Thus, the total estimated expenditure to be borne by Government of India will be Rs.67,266.44 crore.

The allocation in terms of wheat/rice shall be decided by the Department of Food & Public Distribution.  Also, the Department of Food and Public Distribution may decide on the extension of the lifting/distribution period under Phase III and Phase IV of PMGKAY as per operational requirements, arising out of adverse weather conditions like monsoon, snowfall, etc. and supply chain and Covid-induced constraints.

 

Merger of Central Railside Warehouse Company Limited (CRWC) with Central Warehousing Corporation (CWC) gets Cabinet approval

Union Cabinet has approved to merge and transfer all assets, liabilities, rights and obligations of ‘Central Railside Warehouse Company Limited’ (CRWC), a Mini-Ratna Category-II Central Public Sector Enterprises (CPSE) incorporated under the Companies Act, 1956 in 2007 with its holding enterprise ‘Central Warehousing Corporation’ (CWC). The merger will unify similar functions of both the companies (i.e., warehousing, handling, transportation) through a single administration to promote efficiency, optimum capacity utilization, transparency, accountability, ensure financial savings and leverage railway siding for new warehousing capacities.

It is estimated that management expenditure of Railside Warehouse Complexes (RWCs) will come down by Rs. 5 crore due to savings in the corporate office rent, salary of employees, and other administrative costs. The capacity utilization of RWCs will also improve as there will be potential for CWC to store commodities other than commodities of cement, fertilizer, sugar, salt and soda being stored presently. The merger will facilitate setting up of at least 50 more Railside warehouses near the goods-shed locations. This is likely to generate employment opportunities equivalent to 36,500 mandays for skilled workers and 9,12,500 mandays for unskilled workers. The merger is expected to be completed within 8 months of the date of decision.

CWC is a Mini-Ratna Category-I CPSE set up in 1957 to provide for incorporation and regulation of Warehousing Corporations for the purpose of warehousing of agricultural produce and certain other commodities notified by the Central Government and for matters connected therewith. CWC is a profit making Public Sector Enterprise (PSE) with authorized capital of Rs.100 crore and paid up capital of Rs. 68.02 crore. CWC formed a separate subsidiary company named ‘Central Railside Warehouse Company Ltd.’ (CRWC) on 10th July 2007 to plan, develop, promote, acquire and operate Railside Warehousing Complexes / Terminals / Multimodal Logistics Hubs on land leased from Railways or acquired otherwise. CRWC is a lean organization with 50 employees and a staff of 48 outsourced personnel. Presently, it is operating 20 Railside Warehouses across the country. As on 31st March 2020, the net worth (paid up capital plus free reserves) of the company is Rs. 137.94 crore. CRWC developed specialization, expertise and goodwill in development and operation of RWCs but due to shortage of capital and also due to some of the restrictive clauses in its MoU with the Ministry of Railways, its pace of growth was not as expected.

As CWC is the sole shareholder of CRWC and all the assets and liabilities and rights and obligations will be transferred to CWC, there will be no financial loss to either instead it will bring synergy. A separate Division with the name ‘RWC Division’ will be created by CWC for handling operations and marketing of RWCs.

Union Cabinet approves Agreement between India and Saint Vincent and The Grenadines

The Union Cabinet, chaired by the Prime Minister Shri Narendra Modi has approved an Agreement between the Republic of India and Saint Vincent and The Grenadines for the Exchange of Information and Assistance in Collection with respect to Taxes.

This is a new Agreement between the Republic of India and Saint Vincent and The Grenadines. There was no such agreement in the past between the two countries. Agreement mainly proposes to facilitate exchange of information between the two countries and to provide assistance to each other in collection of tax claims. Agreement also contains tax examination abroad provisions which provide that a country may allow the representatives of the other country to enter its territory (to the extent permitted under its domestic laws) to interview individuals and examine records for tax purposes.

Agreement between the Republic of India and Saint Vincent and The Grenadines will help in facilitating the exchange of information between the two countries including sharing of information held by the banks and other financial institutions encompassing the information regarding the legal and beneficial ownership. It will also facilitate the assistance in collection of the tax claims between the two countries. Thus, it will strengthen India’s commitment to fight offshore tax evasion and tax avoidance practices leading to generation of unaccounted black money.

There was no such agreement with Saint Vincent and The Grenadines in the past and India was negotiating this agreement for a long time. Finally, Saint Vincent and The Grenadines agreed to conclude this agreement with India which will promote tax cooperation between the two countries through exchange of information and assistance in collection of outstanding tax claims between the two countries.

MOU signed between India and Fiji for cooperation in the field of agriculture and allied sectors

Union Minister for Agriculture & Farmers Welfare, Shri Narendra Singh Tomar and Fiji’s Minister of Agriculture, Waterways & Environment, Dr. Mahendra Reddy signed a Memorandum of Understanding (MoU) for cooperation in the field of Agriculture and allied sectors between India and Fiji in a virtual meeting held today.

Shri Tomar said that cordial and friendly relations between India and Fiji are based on mutual respect, cooperation and strong cultural and people-to-people ties. Prime Minister Modi’s historic visit to Fiji and the first Forum for India Pacific Islands Cooperation have given a new impetus to India’s engagement with Fiji and the Pacific region. The signing of this MoU today will prove to be a milestone in further strengthening the multi-faceted cooperation between the two countries. Fiji’s Minister Dr. Reddy expressed happiness over the MoU and said that both countries will keep their mutual relations dynamic in the same spirit.

The MoU provides for cooperation in the fields of Dairy Industry Development, Rice Industry Development, Root crop diversification, Water Resources Management, Coconut Industry Development, Food Processing Industry Development, Agriculture Mechanization, Horticulture Industry Development, Agricultural Research, Animal Husbandry, Pest and Disease, Cultivation, Value Addition and Marketing, Post-Harvest and Milling, Breeding and Agronomy.

The Ministry of Agriculture & Farmers’ Welfare, Government of India and the Ministry of Agriculture, Government of the Republic of Fiji shall be the Executing Agencies from respective sides.

Under the MoU, a Joint Working Group will be established to set down procedures and plan and recommend programs of cooperation towards achieving its aims. The Working Group will hold its meetings alternatively in India and Fiji once every two years. The MoU will remain valid for a period of five years from the date of its signing and any variation to its duration will be approved in writing by both Parties.

Ministry of Defence and Goa Shipyard Ltd signs contract for construction of two Pollution Control Vessels for Indian Coast Guard

The Ministry of Defence signed a contract with Goa Shipyard Ltd (GSL) for construction of two Pollution Control Vessels (PCVs) for Indian Coast Guard (ICG) at a cost of about Rs 583 crore, on June 22, 2021. These Special Role ships will be indigenously designed, developed and built by GSL. The acquisition is under ‘Buy Indian – Indigenously Designed Developed & Manufactured (Buy Indian-IDDM)’, the highest priority category for defence capital procurements. The acquisition will significantly augment the capability of ICG to respond to Oil spill disasters at sea and also enhance Pollution Response (PR) efficiency. These two vessels are scheduled for delivery by November 2024 and May 2025 respectively. 

At present, ICG has three PCVs in its fleet at Mumbai, Visakhapatnam and Porbander to carry out dedicated Pollution Surveillance, Oil spill monitoring/Response operations in Indian EEZ and around islands. The new PCVs planned are for pollution response requirements in Eastern and the ecologically sensitive Andaman & Nicobar Regions. The vessels, with capability of operating helicopter onboard, will have many advanced features with modern PR equipment of niche technology for containing, recovering and dispersing marine oil spills. 

While meeting the objectives of AatmaNirbhar Bharat Abhiyan, the contract would further boost the indigenous shipbuilding capability and increase employment opportunities in the shipbuilding sector that involves around 200 MSME vendors.

Additional equity shareholding acquisition of United Breweries Limited by Heineken International B.V. approved by CCI

The Competition Commission of India (CCI) approves acquisition of additional equity shareholding by Heineken International B.V. (“HIBV”) of United Breweries Limited (“UBL”)under Section 31(1) of the Competition Act, 2002. The proposed transaction relates to HIBV’s potential acquisition of additional equity stake up to a maximum of approximately 16.40 percent shareholding in UBL.

HIBV is an investment holding company and is itself not engaged in any business activity. It is a direct/ indirect shareholder for all non-Dutch companies that form part of the Heineken Group. Heineken Group is an international group of companies engaged in the production, manufacture, packaging, distribution, marketing and sale of beer, non-alcoholic beer, cider and cider-based beverages, and a range of other beverages.

UBL is a public limited company incorporated under the Companies Act, 1956 and is principally engaged in the manufacture, sale and distribution of beer in India. UBL’s shares are listed on the BSE Limited and the National Stock Exchange of India Limited.

Detailed order of the CCI will follow.

Comments /suggestions sought by GOI on proposed amendments in Consumer Protection Act

Department of Consumer Affairs, Government of India has sought  comments /suggestions on proposed amendments in the Consumer Protection Act by 6th July, 2021.

New business processes like E-commerce and other market developments have transformed the way Consumers make transactions these days. GOI has been holding a series of discussions with all the stakeholders to strengthen the existing CPA in the light of these changes. These include trade and industry Associations, Consumer rights groups, various Government of India Ministries and other agencies etc. Various new ideas and suggestions came up and many of those have been incorporated in the new Draft Consumer Protection Act.  The same has now been circulated to the public.

Some of these new points include –

  1. Appointment of a Chief Compliance Officer,
  2. Appointment of a “Resident Grievance Officer”,
  3. Added “Cross-selling”
  4. “Fall back liability”,
  5. “Flash sale”,
  6. Registration of e-commerce entities,
  7. Noe-commerce entity shall allow any display or promotion of misleading advertisement whether in the course of business on its platform or otherwise.

In exercise of the powers conferred by sub-clause (zg) of sub-section (1) of section101 of the Consumer Protection Act, 2019 (35 of 2019), the Central Government on23rd July 2020 had notified the Consumer Protection (E-Commerce) Rules, 2020, the Department of Consumer Affairs has sought views/ comments/ suggestions on the proposed amendments to Consumer Protection (E-Commerce) Rules, 2020.

The details are available at the given link in track change mode (proposed additions in ‘blue’ and deletions in ‘red strikethrough’). Views/ comments/ suggestions on the proposed amendments may be sent within15 days (by 6th July 2021) by email to js-ca@nic.in