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Chief Minister MK Stalin lays foundation stone for VinFast’s EV plant in South Tamil Nadu.

Tamil Nadu Chief Minister M.K. Stalin inaugurated the foundation stone for VinFast Auto Ltd’s electric vehicle (EV) and battery manufacturing facility in the state, representing a significant investment of ₹16,000 crore. This development is a result of a memorandum of understanding signed with the Vietnamese EV manufacturer during the Global Investors Meet organized by the DMK government. The event underscores Tamil Nadu’s industry-friendly environment and the government’s commitment to expedite project approvals, with the foundation stone being laid within 50 days of signing the MoU.

Key Points

1. Foundation Stone Laid by M.K. Stalin: The Chief Minister of Tamil Nadu, M.K. Stalin, initiated the construction of VinFast Auto Ltd’s manufacturing facility for electric vehicles and batteries, highlighting an investment of ₹16,000 crore in the state.
2. Memorandum of Understanding: The agreement for the plant was finalized during the Global Investors Meet’s first edition, hosted by the DMK government in January.
3. Fast-Track Approval Process: The foundation stone laying ceremony exemplifies Tamil Nadu’s swift clearance process for industrial projects, being organized just 50 days after the MoU’s signing.
4. Initial Investment and Job Creation: VinFast Auto Ltd plans an initial investment of ₹4,000 crore, expected to create 3,500 jobs in the Tuticorin region, with the plant aiming for a production capacity of 150,000 vehicles.
5. Significance for South Tamil Nadu: The project marks a significant milestone for the region, anticipated to spur job creation and industrial development, as emphasized by Minister for Industries T.R.B. Rajaa.
6. Commendation of VinFast’s Commitment: The rapid commencement of the project post-MoU signing is celebrated, with special thanks extended to the VinGroup’s leadership for their confidence in Tamil Nadu’s potential.
7. Industrial and Economic Growth: The establishment of the VinFast factory is heralded as a key step towards distributed industrial growth across Tamil Nadu, aiming to create employment opportunities and foster a new industrial cluster in South Tamil Nadu.

India’s trajectory toward food security hinges upon palm oil cultivation

Edible oils are critical imports for India, ranking just behind petroleum and gold in terms of value. Despite efforts to boost local production, particularly of palm oil, which constitutes a significant portion of both consumption and imports, India remains the world’s largest importer of palm oil. The article discusses the potential benefits of increasing domestic palm oil production, including significant reductions in import costs, enhanced economic prosperity through higher crop yields and diversified income streams for farmers, and more efficient use of farmland.

Key Points

1. High Import Bill: India’s import of edible oils, particularly palm oil, is substantial, with nearly 60% of the country’s annual consumption of 25 million tonnes being imported, leading to a significant import bill.
2. Increasing Consumption and Imports: The consumption of edible oil in India is expected to rise annually by 2-3%, with imports of edible oils increasing by 25% in the first nine months of the 2022-23 oil year.
3. Strategic Importance of Palm Oil: Palm oil accounts for 33.4% of total edible oil consumption and 59% of imports, making it crucial for India to boost local production to reduce reliance on imports.
4. Advantages of Palm Oil: It is the most imported edible oil due to its versatility and neutral taste, making it suitable for various applications, from food products to personal care items.
5. Productivity and Land Use Efficiency: The oil palm crop is more productive than other oil crops, requiring significantly less land to produce the same amount of oil, making it an ideal choice for India’s agricultural landscape.
6. Potential for Prosperity: The high yield of palm oil can lead to increased prosperity for farmers, with some in Andhra Pradesh seeing their incomes triple after shifting to palm oil cultivation.
7. Intercropping Benefits: Intercropping with oil palm can provide additional income sources for farmers during the initial non-productive years of palm trees, enhancing soil health and farm sustainability.
8. Towards Food Security: Boosting domestic palm oil production is seen as a key step towards achieving food security in India, reducing import costs, and promoting agricultural sustainability and resilience.

Public Sector Banks’ mergers driven by clear political agendas: AIUBEA’s General Secretary N Shankar

N Shankar, the general secretary of the All India Union Bank Employees Association, warned that the merger of public sector banks could be the first step towards privatization and potential acquisition by foreign entities. He criticized the lack of transparency in Parliament regarding the reasons behind these mergers, attributing them to political agendas. This concern was raised during the 37th state conference of the Union Bank of India Employees Union in Kochi, which also addressed issues like staffing challenges and the rise in non-performing assets.

Key Points

1. Privatization Concerns: N Shankar expressed concerns that the merger of public sector banks signals a move towards privatization and possible foreign acquisition.
2. Lack of Clarity in Parliament: Shankar criticized the absence of clear communication in Parliament about the reasons behind the bank mergers, suggesting political motives.
3. Labour Union Protests: Labour unions are actively protesting against further mergers, despite the central government’s inclination to continue with its merger policies ahead of the Lok Sabha elections.
4. State Conference Significance: The 37th state conference of the Union Bank of India Employees Union in Kochi marked the first gathering since the merger of Union, Andhra, and Corporation Banks.
5. Staffing Challenges Highlighted: The conference discussed the difficulties in staffing bank branches nationwide, emphasizing management’s reluctance to hire sub-staff or part-time sweepers despite government orders.
6. Non-Performing Assets Issue: The conference addressed the problem of escalating non-performing assets, which have reached ₹4.28 lakh crore, criticizing the central government’s lack of action on the matter.
7. Business Targets and Goals: Union Bank of India’s achievement of surpassing its business target of ₹19 trillion was celebrated at the conference, with a call for employee cooperation to reach a new goal of ₹21.5 trillion by March 2024.

GST Council may soon clarify tax exemption to RERA.

The GST Council is expected to clarify that the Real Estate Regulatory Authority (RERA) will be exempt from paying Goods and Services Tax (GST). This decision comes after discussions about the nature of RERA’s functions, recognizing it as a regulatory body funded by state governments, thus making it exempt from GST. This move is seen as beneficial for the real estate sector, potentially reducing costs for developers and homebuyers alike.

Key Points

1. RERA Exemption from GST: The GST Council is anticipated to announce that RERA will not be subject to GST, acknowledging its role as a regulator and facilitator in the real estate sector.
2. Constitutional Coverage: RERA operates under Article 243G of the Constitution, which addresses the powers, authority, and responsibilities of panchayats, supporting its exemption.
3. Role of RERA: Established across states, RERA aims to ensure transparency, protect consumer interests, and provide a mechanism for speedy dispute resolution in real estate projects.
4. Funding and Tax Implications: RERAs are funded by state governments, and applying GST on them would effectively tax these governments.
5. Upcoming GST Council Meeting: A meeting of the GST Council, involving the Union Finance Minister and state ministers, is expected before the Model Code of Conduct is in place for the upcoming general election.
6. Previous GST Exemptions: Before July 18, 2022, services by regulatory bodies like the RBI, SEBI, IRDA, FSSAI, and the GST network were exempt from GST, a status that was reconsidered for RERA following the exemption’s lift.
7. Impact on Real Estate Sector: Excluding RERA from GST could lower expenses for real estate developers and homebuyers, as Input Tax Credit (ITC) is not allowed in the residential real estate sector. A formal clarification from the GST Council would greatly benefit the industry.

Paper and paperboard imports rise 37% in Apr-Dec FY23

The Indian Paper Manufacturers Association (IPMA) reported a significant 37% increase in paper and paperboard imports to India in the April-December period of this fiscal year, totaling around 1.47 million tonnes. This surge has negatively impacted local paper mills, with imports affecting the Make-in-India initiative and the employment of around 5 lakh farmers engaged in agro and farm forestry with the domestic paper industry. The rise in imports, particularly from ASEAN countries benefiting from zero import duty under a free trade agreement, is challenging the commercial viability of Indian paper mills.

Key Points

1. Increase in Imports: Paper and paperboard imports rose by 37% to approximately 1.47 million tonnes during April-December this fiscal year, compared to 1.07 million tonnes in the same period last year.
2. Impact on Local Industry: The surge in imports, valued at Rs 10,000 crore over nine months, is undermining the Make-in-India campaign and affecting the livelihood of 5 lakh farmers connected to the domestic paper industry.
3. Domestic Capacity: India has more than adequate capacity to produce almost all grades of paper, yet indiscriminate imports are jeopardizing the profitability of many paper mills.
4. Operational Mills: Out of over 900 paper mills in India, only 553 remain operational, highlighting the strain on the industry.
5. Source of Imports: A 142% increase in imports from ASEAN countries, allowed to enter India duty-free under the ASEAN-India free trade agreement, is a significant contributor to the surge.
6. Growth in Major Grades: Imports of all major grades of paper, including uncoated writing and printing paper, coated paper, and paperboard, are on the rise.
7. International Trade Agreements: Zero duty concessions through ASEAN and Korean Free Trade Agreements (FTAs), along with tariff concessions to China under the Asia Pacific Trade Agreement (APTA), have facilitated the increase in paper imports.
8. Subsidies Abroad: Some countries provide substantial subsidies to their paper mills, giving them a cost advantage over Indian mills, further intensifying competition.

Rs 2,000 notes withdrawal: Currency-in-circulation growth dips to 3.7%.

The Reserve Bank of India’s (RBI) decision to withdraw Rs 2,000 banknotes has led to a deceleration in the growth of currency in circulation (CiC) to 3.7% for the week ended February 9, from 8.2% a year ago. This move also contributed to double-digit growth in bank deposits in January. Additionally, the growth of Reserve Money (RM) slowed down. Nearly 97.5% of the Rs 2,000 banknotes were returned to the banking system by January 31, following the RBI’s announcement to withdraw these notes from circulation in May 2023.

Key Points

1. Deceleration in CiC Growth: The growth rate of currency in circulation slowed to 3.7% from 8.2% a year earlier, influenced by the RBI’s withdrawal of Rs 2,000 notes.
2. Increase in Bank Deposits: Banks experienced double-digit deposit growth in January, attributed to the withdrawal of the Rs 2,000 currency notes.
3. Slower Reserve Money Growth: The overall growth of Reserve Money decelerated to 5.8% from 11.2% the previous year, partially due to changes in the Cash Reserve Ratio (CRR).
4. Withdrawal of Rs 2,000 Banknotes: RBI announced the withdrawal of Rs 2,000 denomination banknotes on May 19, 2023, aiming to reduce the amount of high-value currency in circulation.
5. High Rate of Return: By January 31, 97.5% of Rs 2,000 banknotes had been returned to the banking system, leaving only about Rs 8,897 crore worth in public hands.
6. Exchange and Deposit Deadline: The public was initially given until September 30, 2023, to deposit or exchange Rs 2,000 notes, a deadline extended to October 7, 2023.
7. Continued Exchange at RBI: After discontinuing exchange and deposit services at bank branches on October 7, 2023, the RBI offered individuals the option to exchange such currency or deposit it into their bank accounts at its 19 offices starting October 8, 2023.
8. Introduction of Rs 2,000 Notes: The Rs 2,000 banknotes were introduced in November 2016 following the demonetisation of Rs 1,000 and Rs 500 notes, to facilitate the transition and manage liquidity.

ARCs want banks to sell loan accounts showing signs of incipient stress.

Asset reconstruction companies (ARCs) are advocating for banks to sell bad loans at an earlier stage of distress to improve the chances of recovery. As loans age and deteriorate further, their potential for revival diminishes significantly. Industry leaders argue that expectations placed on ARCs are often unrealistic, given that many loans acquired are nearly beyond salvage. They emphasize that early intervention can lead to better outcomes for the underlying businesses, higher recovery rates for lenders, and ultimately contribute to the economy.

Key Points

1. Early Sale of Bad Loans: ARCs encourage banks to sell non-performing loans (NPLs) at the incipient stage of distress to enhance recovery prospects.
2. Diminishing Recovery Prospects: The likelihood of recovery decreases significantly as bad loans age, often leaving ARCs with minimal chances of reviving these accounts.
3. Unrealistic Expectations: There is a perception that expectations from lenders and investors in security receipts (SRs) towards ARCs are unrealistic, especially when the loans acquired are at a dead-end.
4. Restructuring for Value Maximization: ARCs focus on restructuring viable cases to maximize value and contribute to the broader economy, with better turnaround rates observed when NPLs are sold early.
5. Regulatory Framework for Early Sales: The RBI allows for the sale of Special Mention Accounts (SMA), which show signs of incipient stress, to ARCs without regulatory hurdles, aiming for maximized recoveries for lenders.
6. Categories of Incipient Stress: Banks are required to categorize loan accounts showing signs of incipient stress into three SMA sub-categories based on the duration of overdue payments.
7. Encouragement for Banks: The industry suggests that banks should be encouraged to sell loans early to focus on their core business and support credit growth and the economy.
8. Growth in ARC Sector: RBI data indicates an increase in the cumulative book value of assets acquired by ARCs and a growth in the cumulative security receipts issued, showing the sector’s expansion.

This approach not only aids in the better management of bad loans but also allows banks to concentrate on their primary operations, fostering overall economic growth.

Empowering creditors. IBBI boosts liquidation process with stakeholder engagement.

The Insolvency and Bankruptcy Board of India (IBBI) has introduced a new requirement for liquidators to involve the Stakeholders’ Consultation Committee (SCC) in the preparation of the preliminary report in liquidation processes. This initiative aims to incorporate suggestions and observations from the SCC, ensuring that the interests of key stakeholders, particularly creditors, are considered. Additionally, liquidators are now required to share progress reports on liquidation with the SCC, enhancing transparency and inclusivity in the insolvency resolution process.

Key Points

1. SCC Involvement Mandated: IBBI has mandated the involvement of the Stakeholders’ Consultation Committee in the preparation of the preliminary liquidation report.
2. Requirement for Suggestions: Liquidators must seek suggestions or observations from SCC members while preparing the preliminary report.
3. Finalization of Preliminary Report: The preliminary report should be finalized only after considering the SCC members’ suggestions and observations, and then submitted to the Adjudicating Authority, IBBI, and SCC members.
4. Sharing of Progress Reports: Liquidators are now required to share progress reports on liquidation with the SCC, in addition to submitting these reports to the Adjudicating Authority and IBBI within 15 days after the end of every quarter.
5. Enhanced Transparency and Engagement: This new requirement aims to reduce information asymmetry by keeping creditors informed about the progress, thereby fostering transparency and inclusivity.
6. Expert Opinions: Experts view this move as a positive step towards ensuring a more reasoned commercial perspective in liquidation strategies, facilitating substantive stakeholder engagement, and augmenting the insolvency regime’s strength through inclusive and transparent interactions.

This reform is anticipated to significantly improve the liquidation process by ensuring that the decisions made are well-informed and consider the interests of all stakeholders involved.

RBI approves HDFC Bank’s 90% stake sale in HDFC Credila to ChrysCapital and BPEA EQT

HDFC Bank has received approval from the Reserve Bank of India (RBI) to sell a 90% stake in HDFC Credila Financial Services Ltd to private equity firms ChrysCapital and BPEA EQT. This sale is expected to significantly boost HDFC Bank’s income in the fourth quarter, with an anticipated reflection of about Rs 9000 crore in earnings from this transaction. The sale follows the amalgamation of HDFC Ltd with HDFC Bank, transferring the investment in HDFC Credila from the parent to the bank. Additionally, HDFC Credila is set to receive a fresh equity infusion of Rs 2,000 crore from the new investors to support growth.

Key Points

1. RBI Approval: HDFC Bank received RBI’s approval to divest a 90% stake in HDFC Credila Financial Services Ltd.
2. Impact on Earnings: The bank’s fourth-quarter income is expected to include approximately Rs 9000 crore from the sale of its stake in HDFC Credila.
3. Stake Sale Agreement: HDFC executed a definitive agreement for the stake sale to ChrysCapital and BPEA EQT, retaining a 10% stake in the education loan company.
4. Investment History: Over the past six years, HDFC has invested Rs 1,880 crore in HDFC Credila, including a Rs 700 crore infusion in June 2023.
5. Equity Infusion Agreement: Following the stake sale completion, HDFC Credila has an agreement with the new investors for a fresh equity infusion of Rs 2,000 crore to support operational growth.
6. Regulatory Approvals: The stake sale received approval from the RBI last week and was approved by the Competition Commission of India (CCI) in June 2023.
7. HDFC Credila’s Financials: As of the end of September 2023, HDFC Credila managed assets under management worth Rs 22636 crore and reported a profit after tax of Rs 233 crore for the same period.

Washington’s biggest sanction wave on Russian oil threatens to engulf India.

The United States has implemented its largest sanctions package to date, targeting Sovcomflot, Russia’s state-owned shipping company, and 14 of its vessels that frequently transport Russian oil to India. This move is part of the efforts to reduce India’s reliance on Russian oil by restricting the shipping channels used for its transport. The sanctions are expected to disrupt the supply of Russian crude to India, which has been a significant source of oil for the country, especially given the recent increase in shipments.

Key Points

1. US Sanctions on Russian Shipping: The US has targeted Sovcomflot and 14 of its vessels with sanctions, affecting the transport of Russian oil to India.
2. Impact on Indian Oil Imports: The sanctioned tankers have carried about 68 cargoes to India since January 2023, accounting for approximately 6% of India’s total Russian crude imports last year.
3. Comparison with Nigerian Supplies: The quantity of oil transported by these tankers to India surpasses the amount supplied by Nigeria to India before the Ukraine war.
4. Potential Payment Issues: Indian banks are unlikely to process payments for crude carried on sanctioned vessels, complicating the delivery and payment process for these cargoes.
5. Shipping Capacity Shortage: The sanctions exacerbate Russia’s shipping capacity issues, making it difficult for Moscow to reroute its crude exports to other markets.
6. Sanctioned Vessels: A detailed list of the sanctioned vessels includes ships like Georgy Maslov, NS Captain, and Anatoly Kolodkin, highlighting their involvement in transporting crude to India.
7. Washington’s Strategy: The sanctions are part of Washington’s broader strategy to dismantle the so-called shadow fleet that aids in circumventing oil price caps and sanctions, affecting oil transport to countries like China, India, and Turkiye.
8. Enforcement and Compliance: Indian officials express concerns over the fairness of US sanctions, especially when enforcement orders can disrupt ongoing shipments, forcing Indian refiners to reject cargoes.
9. Continued Russian Oil Exports: Despite the sanctions, Russian crude oil exports to non-FSU countries have remained relatively stable, indicating the complexity of fully curtailing Russia’s oil trade.

This strategic move by the US aims to diminish the flow of Russian oil to India and other countries, thereby impacting Russia’s oil revenue while also influencing global oil supply dynamics.

CPAI bats for novel category of qualified jewellers for silver at IIBX

The Commodity Participants Association of India (CPAI) has approached the IFSCA, requesting the introduction of a more accessible entry point for Qualified Jewellers (QJ) in the silver segment of the India International Bullion Exchange (IIBX) at GIFT City. They propose a lower net worth criterion for silver-focused jewellers and traders, aiming to increase participation and volumes in the silver market by acknowledging its unique dynamics.

Key Points

1. CPAI’s Proposal to IFSCA: CPAI has requested the introduction of a novel category for Qualified Jewellers in the silver segment at IIBX, advocating for a lower net worth requirement.
2. Meeting with IFSCA Chairman: Narinder Wadhwa, President of CPAI, met with IFSCA Chairman K Rajaraman to discuss the proposal, emphasizing the need to facilitate easier access for silver-focused participants.
3. Suggested Net Worth Criterion: CPAI suggests allowing participants with a net worth of ₹10 crore or above to operate as Qualified Jewellers, a reduction from the current requirement of ₹25 crore.
4. Current Eligibility Criteria: Presently, a company must have a minimum net worth of ₹25 crore to qualify as a QJ on IIBX, a criterion that applies equally to both gold and silver segments.
5. Comparison of Unit Values: CPAI highlighted the significant difference in unit values between silver ($23 per Troy Ounce) and gold ($2000 per Troy Ounce), supporting their case for a lower entry barrier for silver traders.

CPAI’s initiative aims to make the silver market more accessible and vibrant by adjusting the net worth criteria to reflect the market’s characteristics, thereby encouraging broader business participation.

No mandate for adoption of proposed investment facilitation pact at WTO MC13: CSOs

Civil Society Organizations (CSOs) have criticized the World Trade Organization (WTO) Director General Ngozi Okonjo-Iweala for her “appalling” criticism of India and South Africa’s opposition to the proposed ‘investment facilitation for development’ pact led by China at the WTO’s 13th Ministerial Conference (MC13). The CSOs argue that there is no mandate for adopting this agreement, which is seen as a breach of fundamental WTO rules. They highlight concerns over the agreement’s relevance to development and the need for investment to focus on strategic sectors genuinely advancing development in countries.

Key Points

1. No Mandate for Proposed Pact: CSOs emphasize that there is no consensus or mandate among WTO members for the adoption of the ‘investment facilitation for development’ pact proposed by a subgroup led by China.
2. Violation of WTO Rules: The push to adopt the agreement at MC13 by a subgroup of WTO members is seen as a breach of fundamental WTO rules, including the principle of consensus-based decision-making.
3. India and South Africa’s Opposition: Both countries oppose the China-backed initiative, arguing it violates the WTO framework by introducing a “non-mandated, non-multilateral issue” into the formal process.
4. Historical Rejection of Investment Agreements: Attempts to negotiate an investment agreement within the WTO have been explicitly rejected since 1996, with a clear decision in 2004 and reaffirmation in the 2015 Nairobi Ministerial Conference that such discussions require agreement by all members.
5. Criticism of WTO DG’s Stance: The WTO Director General’s criticism of India and South Africa is viewed as exceeding her neutral role as an international public official, with accusations of not adhering to WTO’s own rules.
6. Misrepresentation of Development Goals: Critics argue that the investment facilitation agreement falsely claims to promote development, ignoring the real needs of developing countries, LDCs, and small island states facing challenges such as poverty, infrastructure, and high costs.
7. Need for Strategic Investment Facilitation: The CSOs advocate for a commitment to facilitate investment in strategic sectors that genuinely advance the development of countries, challenging the effectiveness of the proposed investment agreement in addressing key development issues.

Banks look at bonds, rights issue amid stretched loan-to-deposit ratios

In response to the challenging liquidity environment and high loan-to-deposit ratios (LDRs), banks in India are exploring alternative fundraising methods, including tapping into capital markets through various debt and equity instruments. The surge in credit growth has pushed the LDR to a two-decade high, leading to concerns about slower growth or increased costs for future lending. Banks, particularly private ones, are raising funds through overseas borrowing, bond issuances, and equity raises to support their balance sheets and maintain competitive deposit growth rates.

Key Points

1. High LDRs Prompting Action: Indian banks are facing a high loan-to-deposit ratio of 80% as of December 2023, prompting them to look for alternative funding sources.
2. Credit Growth vs. Deposit Growth: Credit growth is currently 1.5 times the nominal GDP, outpacing deposit growth, which is in line with nominal GDP. This discrepancy is expected to make future loan growth slower or more expensive.
3. Impact on Private Banks: Private banks, with LDRs potentially crossing 97%, are particularly vulnerable, necessitating the use of onshore and offshore wholesale borrowings at potentially higher costs.
4. Fundraising Efforts: Banks like SBI, Bank of Baroda, Canara Bank, and HDFC Bank have raised significant funds through overseas borrowing and bond issuances. South Indian Bank is planning a rights issue, and two small finance banks have launched IPOs.
5. Moderating Credit Growth: Credit growth is expected to moderate to 14% in FY25 from 16% in FY24, but will still outpace deposit growth, impacting net interest margins (NIMs) and keeping deposit competition high.
6. Fixed Deposit Rate Hikes: To attract deposits, banks have increased FD rates, especially for shorter tenures, with large private lenders offering higher returns compared to smaller banks and public sector counterparts.
7. Future Outlook on Margins: Despite the current pressures, BNP Paribas Securities suggests that the impact on margins from term deposit repricing may ease by Q1 FY25 as TD rates have likely peaked and most repricing has been completed.

These developments highlight the strategies banks are adopting to navigate a tight liquidity scenario, with a focus on sustaining their growth and maintaining healthy balance sheets amidst rising costs and competitive pressures.

Sudarshan Setu: PM Modi inaugurates ‘India’s longest cable-stayed bridge’ in Gujarat; Here’s what you need to know.

Prime Minister Narendra Modi inaugurated India’s longest cable-stayed bridge, the ‘Sudarshan Setu,’ in Gujarat, connecting Okha and Beyt Dwarka. This 2.32 km bridge, constructed at a cost of ₹978 crore, aims to facilitate easier access to the Dwarkadhish temple for residents and pilgrims. The bridge features a unique design, including solar panels generating one megawatt of electricity, and enhances the connectivity and cultural heritage of the area. Additionally, PM Modi is set to inaugurate Gujarat’s first AIIMS in Rajkot, emphasizing the government’s focus on infrastructure development and healthcare.

Key Points

1. Inauguration of Sudarshan Setu: Prime Minister Narendra Modi inaugurated the Sudarshan Setu, India’s longest cable-stayed bridge, enhancing connectivity between Okha mainland and Beyt Dwarka island in Gujarat.
2. Bridge Specifications: The bridge spans 2.32 km, with a construction cost of ₹978 crore, and features four lanes and 2.50-meter-wide footpaths on each side.
3. Cultural and Spiritual Significance: The bridge’s design includes verses from the Bhagavad Gita and images of Lord Krishna, adding a spiritual dimension to its structure.
4. Solar Panels for Electricity Generation: Solar panels installed on the bridge’s upper sections are capable of generating one megawatt of electricity.
5. Facilitating Pilgrimage: The bridge simplifies access to the revered Dwarkadhish temple, eliminating the need for boat transport and serving as a new tourist attraction.
6. Foundation and Construction: Prime Minister Modi laid the foundation stone for the Sudarshan Setu in October 2017, highlighting its importance in linking old and new Dwarka.
7. Inauguration of AIIMS Rajkot: Alongside the bridge, PM Modi will inaugurate Gujarat’s first AIIMS in Rajkot, part of a broader initiative to establish AIIMS hospitals across India.
8. Government’s Commitment to Development: The inauguration events underscore the government’s dedication to enhancing infrastructure and healthcare facilities in the region.

Alphabet to shut Google Pay in US; India ops unaffected.

Google has announced the discontinuation of its Google Pay app in the US, aiming to streamline the app experience by transitioning users to Google Wallet. The change, effective from June 4, 2024, reflects Google Wallet’s higher usage rates in the US. However, Google Pay services in other countries, including India, will remain unaffected. This move is part of Google’s effort to simplify digital payments and ensure a smooth transition for users by maintaining access to popular payment features through Google Wallet.

Key Points

1. Google Pay Shutdown in the US: Google will discontinue the standalone Google Pay app in the US by June 4, 2024, to simplify the user experience.
2. Transition to Google Wallet: All Google Pay users in the US will be migrated to Google Wallet, which is reportedly used five times more than Google Pay in the region.
3. Services Unaffected in Other Countries: Google Pay will continue to operate as usual in other countries, including India, where the app’s unique features are tailored to meet local needs.
4. Continued Access to Payment Features: US users will still be able to use their preferred payment methods and tap to pay in stores through Google Wallet.
5. Funds Management After Shutdown: After the Google Pay app’s discontinuation, US users can view and transfer funds to their bank account via the Google Pay website.
6. Downloading Google Wallet: Users are encouraged to download the latest version of Google Wallet from Google Play to access and manage their cards seamlessly.

IL&FS moves NCLAT to avoid wilful defaulter tag

The IL&FS Group, which faced bankruptcy in October 2018, is seeking legal measures to prevent banks from labeling it as a “wilful defaulter” and taking actions against its board members appointed post-bankruptcy. The group has appealed to the National Company Law Appellate Tribunal (NCLAT) against the Reserve Bank of India and 11 public sector banks, arguing that such measures would contravene existing court orders that protect its directors and the ongoing resolution process.

Key Points

1. Judicial Intervention Sought: IL&FS Group has approached NCLAT to prevent banks from declaring it a wilful defaulter and targeting its board members.
2. Protection Against Legal Actions: The group contends that actions by banks would violate court orders granting immunity to its government-appointed board, tasked with managing its ₹94,000 crore debt.
3. NCLT and NCLAT Orders: The National Company Law Tribunal (NCLT) had previously provided immunity to IL&FS directors, requiring any actions against them to have prior approval.
4. Banks Issuing Show-Cause Notices: Despite moratoriums on debt repayment and court-ordered protections, several public sector banks have sent show-cause notices to IL&FS.
5. List of Banks Involved: Banks like the Central Bank of India, Bank of Baroda, and the State Bank of India, among others, have raised objections and threatened to label IL&FS as wilful defaulters.
6. Resolution Framework Participation: Some of these banks are part of IL&FS’s approved resolution framework and have received interim distribution payouts, yet they still threaten to apply the defaulter tag.
7. Resolution Process and Fresh Debt: IL&FS argues that the ongoing resolution process, which has not incurred new debt, renders the defaulter tag irrelevant and views the banks’ actions as pressure tactics to meet debt demands.

ITAT grants partial relief to ICICI Bank

The Income Tax Appellate Tribunal (ITAT) in Mumbai has ruled in favor of ICICI Bank Ltd, allowing it to deduct ₹1,855 crore as a bad debt write-off for the financial year 2015-16. However, the tribunal dismissed the bank’s appeal for a ₹502-crore long-term capital loss allowance. The ITAT upheld the Principal Commissioner of Income Tax’s (PCIT) decision that the bank incorrectly claimed a long-term capital loss by applying the cost of inflation index on foreign currency instead of Indian currency. Additionally, the tribunal corrected an erroneous assessment that provided ICICI Bank with an excess deduction, and rejected the bank’s reduction in provision for depreciation on investment.

Key Points

1. Deduction for Bad Debt Write-off: ITAT allowed ICICI Bank to avail ₹1,855 crore bad debt write-off as a deduction.
2. Dismissal of Capital Loss Allowance: The tribunal dismissed the bank’s appeal for a ₹502-crore long-term capital loss allowance, supporting PCIT’s ruling against the claimed excess capital loss.
3. Incorrect Capital Gain Calculation: ICICI Bank’s calculation of capital gain and loss, which applied the cost of inflation index on foreign currency, was deemed incorrect by ITAT.
4. Foreign Exchange and Inflation Index Issue: The tribunal noted that the bank benefited from both foreign exchange fluctuation and the cost inflation index, which contradicted the Income-Tax Act.
5. Validation of Written Off Bad Debt: Despite PCIT’s conclusion that no bad debt was written off, ITAT found that the bad debt had indeed been written off in the bank’s annual accounts after verification by the assistant commissioner.
6. Excess Deduction Correction: ITAT upheld PCIT’s decision declaring the assistant commissioner’s assessment as erroneous, which had provided an excess deduction of ₹159 crore to ICICI Bank.
7. Rejection of Reduction in Provision for Depreciation: The tribunal rejected ICICI Bank’s attempt to reduce its provision for depreciation on investment by ₹46 crore from ₹297 crore.

This ruling highlights the tribunal’s scrutiny of tax claims and deductions, emphasizing the adherence to proper accounting methods and compliance with the Income-Tax Act.

No foreign remittances licence, no Fema violation: Paytm to ED

Paytm Payments Bank informed the Enforcement Directorate (ED) that it does not hold the necessary license (AD-II) for conducting outward foreign remittances, thereby arguing that it cannot violate the Foreign Exchange Management Act (FEMA). The ED, which is investigating potential FEMA violations by entities using Paytm Payments Bank, has preliminarily found no such violations by the bank after reviewing additional data from the Reserve Bank of India (RBI). The investigation is part of a broader inquiry into FEMA compliance across mobile payment platforms.

Key Points

1. License for Foreign Remittances: Paytm Payments Bank stated it lacks the AD-II license required for outward foreign remittances, countering allegations of FEMA violations.
2. ED’s Inquiry to RBI: The ED sought verification from the RBI regarding Paytm Payments Bank’s claim of not possessing the AD-II license.
3. Investigation into FEMA Violations: The federal agency is investigating alleged FEMA violations by entities using Paytm Payments Bank.
4. No Prima Facie Violations Found: Preliminary findings by the ED, after reviewing data from the RBI, indicate no FEMA violations by Paytm Payments Bank.
5. Request for Information on Other Platforms: The ED has requested details from the RBI on entities that may have violated FEMA norms using other mobile payment platforms, not just Paytm Payments Bank.
6. ED’s Earlier Interrogation of Paytm Officials: Paytm Payments Bank officials were questioned by the ED earlier in the month as part of the investigation into alleged FEMA violations.
7. Stance on FEMA Violations: Paytm Payments Bank maintains that without the AD-II license, it cannot be in violation of FEMA regulations.
8. Procedural Deficiencies Found: The ED identified certain procedural deficiencies in Paytm Payments Bank’s operations, which are related to non-compliance with KYC norms and are under the RBI’s purview for penalties, not the ED’s.

The ongoing investigation highlights the regulatory scrutiny of digital payment platforms in India, particularly in relation to compliance with foreign exchange regulations.

FM-fintech companies meet on Monday: Compliance, innovation on table.

Finance Minister Nirmala Sitharaman is set to meet with leaders of major fintech companies and a deputy governor of the Reserve Bank of India (RBI) to address regulatory challenges in the fintech sector. The meeting aims to find a balance between regulatory compliance and fostering innovation. Notably, Paytm, recently under scrutiny by the RBI for KYC non-compliance, is expected to be excluded from this discussion. The dialogue underscores the government’s commitment to enhancing financial inclusion through digital public infrastructure, amidst concerns over the risks associated with digital financial services.

Key Points

1. Meeting with Fintech Leaders: Nirmala Sitharaman will meet heads of fintech companies like Amazon Pay, Zerodha, and others to discuss regulatory issues in the sector.
2. Exclusion of Paytm: Paytm is likely to be excluded from the meeting following RBI’s actions against the company for KYC non-compliance.
3. Participants: The meeting will also include senior officials from the State Bank of India and the National Payments Corporation of India (NPCI), along with an RBI deputy governor.
4. Focus on Compliance and Innovation: The finance minister aims to mediate between fintech companies and the RBI to ensure regulatory compliance without stifling innovation.
5. Digital Public Infrastructure (DPI): The government prioritizes building DPI to promote financial inclusion, with considerations of the potential risks to the financial ecosystem.
6. Financial Stability and Development Council (FSDC) Meeting: Sitharaman chaired an FSDC meeting focusing on unauthorized lending via online apps and simplifying the KYC process.
7. Strategy for KYC Process: The FSDC discussed formulating a strategy to digitalize and simplify the KYC process in the financial sector, aiming to enhance user experience and regulatory adherence.

This meeting reflects the government’s efforts to bridge the gap between the rapid advancement of fintech innovations and the regulatory framework necessary to ensure a safe and inclusive financial ecosystem.

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