Welcome to Daily Banking Digest, your premier source for the latest news and insights on April 01, 2024, focusing on banking, the economy, and finance. Our platform offers a comprehensive overview of the day’s most critical financial stories, market trends, and economic developments. Whether you’re a professional in the financial sector, an investor monitoring market movement, or someone interested in staying informed about the economic landscape, Daily Banking Digest provides reliable, up-to-date information.

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India’s Growing Demand for Company Secretaries: ICSI Projects Need for 2 Lakh Professionals by 2047

The Institute of Company Secretaries of India (ICSI) anticipates a surge in demand for company secretaries as India’s economy is projected to reach $30 trillion by 2047. The country currently has 72,000 company secretaries, but this number is expected to triple to meet the growing needs of the economy. ICSI is actively enrolling students and collaborating with other institutions to enhance capacity building and meet the future demand.

Key Points:

Demand for Company Secretaries: – India’s economy is expected to reach $30 trillion by 2047. – This will lead to a threefold increase in the demand for company secretaries.

Current Supply: – India currently has 72,000 company secretaries.

ICSI’s Role: – ICSI enrolls 14,000 students annually. – It plans to double the enrollment this year.

Collaboration with NISM: – ICSI has signed an MoU with NISM to enhance collaboration in capacity building and programs related to compliance, securities markets, law, and governance.

University Partnerships: – ICSI has partnerships with 141 universities across India.

NTPC Shuts Down Barauni Stage-I Power Plant Permanently

NTPC has permanently closed the Stage-I (2×110 MW) of its Barauni Thermal Power Station, effective March 31, 2024. The closure is part of NTPC’s plan to become a 130 GW firm by 2032.

Key Points:

Closure of Barauni Thermal Power Station Stage-I: NTPC has permanently closed the 220 MW Stage-I of its Barauni Thermal Power Station.
Acquisition of Barauni Thermal Power Station: NTPC acquired the 720 MW Barauni Thermal Power Station from Bihar State Power Generation Company in 2018.
Stage-II Dedication: Union Power Minister RK Singh dedicated the 500 MW Stage-II of the Barauni Thermal Power Station to the nation in November 2021.
Badam Coal Block: The project is linked to the Badam Coal Block, which is part of the transfer scheme.
NTPC’s Expansion Plan: NTPC aims to become a 130 GW firm by 2032.

MPC Expected to Maintain Policy Rates, Predicts NCAE

The Indian economy remains buoyant at the end of fiscal 2023-24, with a projected growth rate of 7.6% as per the CSO’s second Advance Estimate. Key indicators such as PMI for manufacturing and services, infrastructure growth, GST collections, and bank credit growth support this optimistic outlook. However, inflationary pressures remain elevated, with CPI headline inflation at 5.1% in February 2024.

Key Points

PMI for Manufacturing and Services:

PMI for manufacturing increased to 56.9 in February, indicating strong expansionary momentum.

PMI for services maintained a robust trend.

Infrastructure Growth:

Growth in the output of eight key infrastructure sectors rose to a three-month high of 6.7% in February.

GST Collections:

GST collections reached ₹ 1.7 lakh crore in February, registering a year-on-year growth of 12.5%.

GST E-way bill collections grew by 18.9% year-on-year.

Bank Credit Growth:

Bank credit growth remained strong at 20.5%, with robust growth in personal loans, services, and agriculture.

External Sector:

Current Account Deficit moderated in Q3 FY2023-24.

Remittances flow remained high at $31.4 billion.

Services trade surplus increased.

Portfolio inflows resumed.

India’s foreign exchange reserves increased to nearly $650 billion.

Inflation:

CPI headline inflation remained elevated at 5.1% in February 2024, primarily due to high food price inflation.

Core inflation declined.

Monetary Policy Outlook:

Strong growth combined with elevated inflation rates may lead to a status quo on policy rates in the upcoming Monetary Policy Committee meeting.

CPSE Dividend Receipts Surpass Revised Estimates by 26%, Reaching ₹63,000 Crore

The Indian government’s dividend receipts from Central Public Sector Enterprises (CPSEs) have surpassed the revised budget estimate by 26%, reaching approximately ₹63,000 crore. This increase is attributed to strong financial performance by CPSEs such as Coal India, ONGC, Powergrid, and GAIL. The higher dividends benefit shareholders and contribute to the growth of CPSEs’ market capitalization.

Key Points:

Dividend Receipts Exceed Revised Estimate: – Dividend receipts from CPSEs have exceeded the revised budget estimate of ₹50,000 crore by 26%. – Actual dividend collections reached ₹62,929.27 crore in the 2023-24 fiscal.

Strong Financial Performance of CPSEs: – Higher dividends reflect the robust financial performance of CPSEs during the 2023-24 fiscal. – CPSEs with surplus funds are encouraged to pay dividends to maintain investor interest.

Benefits to Shareholders: – Dividend payouts benefit retail and institutional shareholders. – Higher dividends generate interest in PSU shares.

Growth in CPSE Market Capitalization: – The combined market capitalization of CPSEs, banks, and insurance companies has grown 500% in the past three years. – Government’s equity holding has increased fourfold to ₹38 lakh crore.

RBI Considers Establishing Digital India Trust Agency to Curb Predatory Lending Apps

The Reserve Bank of India (RBI) is planning to establish the Digital India Trust Agency (DIGITA) to combat the rise of illegal lending apps and cyber fraud. DIGITA will verify and maintain a public register of legitimate lending apps, and apps without its “verified” signature will be considered unauthorized. The agency will also vet digital lending apps to promote transparency and accountability in the sector. Additionally, the RBI has provided a list of 442 digital lending apps to the IT Ministry for whitelisting with Google, which has removed over 2,200 such apps from its app store.

Key Points:

1. Establishment of Digital India Trust Agency (DIGITA) – RBI plans to establish DIGITA to curb cyber fraud and illegal lending apps. – DIGITA will verify and maintain a public register of legitimate lending apps. – Apps without DIGITA’s “verified” signature will be considered unauthorized.

2. Verification of Digital Lending Apps – DIGITA will be responsible for vetting digital lending apps. – Verification process aims to enhance transparency and accountability in the sector.

3. Collaboration with Google – RBI has shared a list of 442 digital lending apps with the IT Ministry for whitelisting with Google. – Google has removed over 2,200 digital lending apps from its app store. – Google’s policy change allows only apps published by RBI-regulated entities or their partners.

HDFC Bank Plans to Divest HDFC Education Subsidiary

HDFC Bank plans to sell its entire stake in HDFC Education and Development Services Private Ltd. through a Swiss challenge method. The bank has received an anchor bid and will invite counteroffers from other interested parties. The successful bidder will be determined after the completion of the Swiss challenge process. HDFC Education provides services to three education schools.

Key Points:

Sale of HDFC Education Stake: HDFC Bank to sell its 100% stake in HDFC Education and Development Services Private Ltd.
Swiss Challenge Method: Transaction to be conducted through the Swiss challenge method.
Anchor Bid: HDFC Bank has received an anchor bid from an interested party.
Counter Offers: Other parties can submit counteroffers during the Swiss challenge process.
Finalization of Purchaser: HDFC Bank will finalize the purchaser based on the Swiss challenge process.
Definitive Documentation: Bank and successful bidder will enter into definitive documentation after the process.
Services Provided by HDFC Education: HDFC Education provides services to three education schools.

Ambani Urges Business Leaders to Foster an Equitable and Prosperous India

Mukesh Ambani, Chairman of Reliance Industries, emphasized the responsibility of the business community in building a stronger and more inclusive India. He praised the gems and jewellery industry for its significant contributions to exports and job creation, and expressed confidence in its potential to reach $100 billion in exports in the future.

Key Points:

Responsibility of the Business Community: – Businesses have a collective responsibility to contribute to India’s development and inclusivity.

Gems and Jewellery Industry’s Success: – The industry has achieved $40 billion in exports and created over 5 million jobs. – It has consistently been among the top export industries in India.

Potential for Growth: – The industry has the potential to achieve $100 billion in exports in the future. – It can become a champion of ‘Make in India’ by adding value and showcasing Indian design and talent.

Partnership Opportunities: – Ambani hinted at the possibility of collaboration between the Kathiawadis and Palanpuris in the industry.

Recognition of Russell Mehta: – Russell Mehta, Managing Director of Rosy Blue India, received the Lifetime Achievement Award.

GJEPC’s Role: – GJEPC is the apex body of the gems and jewellery industry in India. – It has played a significant role in promoting exports and supporting the industry’s growth.

Pharma Sector Dominates PLI Investments, Surpassing Rs 1.06 Lakh Crore by December

The Production-Linked Incentive (PLI) schemes, launched in 2021 for 14 sectors, have attracted over Rs 1.06 lakh crore in investments as of December 2023. The pharmaceutical and solar modules sectors have received the highest investments, while sectors like IT hardware, auto, and textiles have seen tepid response. The government is considering reviewing and tweaking the scheme for underperforming sectors.

Key Points:

Investments: – Total investments of over Rs 1.06 lakh crore attracted till December 2023. – Pharmaceuticals and solar modules account for nearly half of the total investments.

Sector-wise Investments: – Pharmaceuticals: Rs 25,813 crore (exceeding expectations) – Solar PV modules: Rs 22,904 crore (below expectations) – Bulk drugs: Rs 3,586 crore (close to expectations) – Medical devices: Rs 864 crore (below expectations) – Food processing: Rs 7,350 crore (close to expectations) – Telecom: Rs 2,865 crore (below expectations)

Underperforming Sectors: – IT hardware: Rs 270 crore (significantly below expectations) – Auto and auto components: Rs 13,037 crore (below expectations) – Textiles: Rs 3,317 crore (below expectations) – ACC battery storage: Rs 3,236 crore (below expectations)

Government Response: – Government reviewing and considering tweaking the scheme for underperforming sectors. – Rs 4,415 crore disbursed under the scheme till October 2023.

CCI Chief Clarifies Applicability of New Regulations to Ongoing Investigations

The Competition Commission of India (CCI) has implemented new competition regulations covering settlement, commitment, leniency plus, and global turnover. These regulations apply to ongoing investigations and aim to facilitate quick market corrections and deter anti-competitive practices. The CCI now has the authority to impose penalties of up to 10% of a company’s global turnover for violations.

Key Points:

Applicability of New Regulations: – Applicable to all cases under investigation by the CCI.

Settlement and Commitment Framework: – Facilitates quick market correction.

Leniency Plus Regime: – Incentivizes entities to provide information about cartels.

Global Turnover Penalty: – Penalty of up to 10% of global turnover for competition law violations. – Significant impact on multi-product/service companies and digital market cases.

Average Relevant Turnover/Income Penalty: – Penalty of up to 30% of average relevant turnover/income, subject to a maximum of 10% of global turnover.

Stakeholder Engagement: – Regulations finalized after consultation with industry representatives, legal experts, consumer groups, and academia.

Legal Challenges to CCI Rulings: – Some rulings have been legally challenged, but CCI’s views have generally been accepted by courts.

Expedited Cases: – CCI is prioritizing cases against cartels and in the digital market.

Digital Market Data Unit: – DMDU has commenced operations at the CCI.

Bank of India Increases Lending Rates by 0.10%

Bank of India (BoI) and Indian Bank have announced increases in their lending rates, making loans more expensive for borrowers. BoI’s lending rate will increase by 10 basis points, effective April 1, while Indian Bank’s lending rate will increase by 5 basis points, effective April 3.

Key Points:

BoI Lending Rate Hike:
- Increase of 10 basis points
- Effective from April 1
- New RBLR: 9.35%
Indian Bank Lending Rate Hike:
- Increase of 5 basis points
- Effective from April 3
- Linked to base rate and Benchmark Prime Lending Rate

Updated Tax and NPS Rules Effective April 1, 2025

The new financial year (FY2024-25) begins on April 1, bringing with it updated regulations for income tax, insurance, mutual funds, and other financial instruments. These changes, include the introduction of a default new tax regime, revisions to life insurance policies, and mandatory digitization of insurance policies.

Key Points

Tax Slab – Income tax slabs remain unchanged from FY2023-24. – New tax regime introduced as default, with option to choose old regime.

Advantages of New Tax Regime – No need for travel and rent receipts. – Basic exemption limit increased to Rs 3 lakh. – Taxable limit increased to Rs 7 lakh. – Surcharge rates reduced for incomes over Rs 5 crore.

Life Insurance Policies – Amount from life insurance policies taxable if yearly premium exceeds Rs 5 lakh.

E-Insurance – Digitization of insurance policies mandatory from April 1, 2024.

Small Saving Schemes – Interest rates on small savings schemes remain unchanged. – Sukanya Samriddhi scheme: 8.2% interest. – PPF and post office savings deposits: 7.1% interest. – Kisan Vikas Patra: 7.5% interest. – NSC: 7.7% interest. – MIS: 7.4% interest.

National Pension System (NPS) – Two-factor authentication introduced for security.

EPFO – Automatic transfer of PF balance to new organization upon job change.

Revises Retail Prices of 65 Formulations – Revised ceiling rates for essential drugs effective from April 1.

FASTag – KYC completion mandatory by March 31 to avoid deactivation.

Mutual Funds – KYC mandatory for all transactions from April 1. – Bank statements and utility bills no longer valid for KYC.

Credit and Debit Card – SBI Card revises reward points policy for rental payments. – SBI increases annual maintenance charges for certain debit cards.

Indian Economy Projected to Grow Around 7% in FY25, Despite Lingering Risks

India is projected to experience robust economic growth in FY25, with GDP growth estimated between 6.8-7%. However, global factors such as slower growth, higher commodity prices, and geopolitical tensions pose risks. Inflation is expected to ease, allowing the Reserve Bank of India to potentially initiate a rate cut cycle.

Key Points:

Growth Projections: – GDP growth projected between 6.8-7% in FY25, slowing down in Q2 due to elections. – Agriculture and investment growth expected to support growth.

Risks: – Slower global growth, higher commodity prices, and geopolitical turbulence may impact growth and stability.

Domestic Economic Activity: – Domestic economic activity remained resilient in Q4 FY24, supported by high-frequency indicators. – Restrictive interest rates and regulatory actions may weigh on demand in FY25.

Private Consumption: – Tepid growth in private final consumption expenditure in FY24. – Morgan Stanley expects recovery in private consumption due to narrowing rural-urban and goods-services gaps.

Capital Formation: – Gross fixed capital formation (GFCF) grew 10.6% in Q4 FY24. – Government’s focus on capital spending has boosted capex to GDP ratio. – Private capex showing signs of recovery.

Exports: – India’s exports have shown resilience despite geopolitical events. – Net exports expected to be less of a drag on growth.

Inflation: – Retail inflation expected to ease to 4.5% in FY25. – Food inflation dynamics will govern headline inflation trajectory. – Monsoon performance will be closely monitored.

Monetary Policy: – Inflation easing may allow for a shallow rate cut cycle. – Easing cycle may be delayed due to better-than-expected growth, capex, and productivity.

India’s Role in Asia Pacific’s Expanding Regasification Capacity

India is expanding its natural gas infrastructure by adding 24 million tonnes per annum (mtpa) of capacity, accounting for 20% of the total regasification capacity being added in Asia Pacific. India is projected to be the world’s largest growth market for natural gas in the next decade, with China claiming the top spot till 2030.

Key Points

India’s Natural Gas Infrastructure Expansion – India is adding 24 mtpa of natural gas infrastructure capacity. – This expansion accounts for 20% of the total regasification capacity being added in Asia Pacific.

India’s Natural Gas Demand – India’s gas demand is forecast to double by 2030 and reach 105 mt by 2050. – To meet this demand, India plans to increase its regasification capacity to 115 mtpa by 2050.

India’s Natural Gas Production – India’s natural gas production has been increasing since 2020. – Offshore production accounts for over 70% of the growth in production. – India aims to achieve a natural gas production level of 50 bcm by 2050.

Government Initiatives – India is targeting a 15% share of natural gas in its energy mix by 2030. – The Hydrocarbon Exploration and Licensing Policy (HELP) was introduced to attract foreign investment and expedite exploration activities. – Revenue-sharing contracts (RSC) have been introduced to streamline operations and stimulate exploration.

International Participation – Reliance Industries (RIL) and BP have brought three offshore fields into production since 2020. – These fields are expected to collectively produce 10 bcm to meet domestic demand in India. – ONGC plans to boost its natural gas production by 25% by 2025.

Adani Ports: A Maritime Colossus in India

Adani Ports and Special Economic Zone Ltd (APSEZ), India’s largest private port operator, continues to expand its dominance, handling nearly 28% of the country’s port volumes. With a target of one billion tonnes by 2030, APSEZ aims to become the world’s largest port company. Through acquisitions and greenfield development, APSEZ has established a presence in all maritime states, transforming India’s port sector into an end-to-end logistics solution provider.

Key Points

Dominance in Port Operations – APSEZ controls 28% of India’s port volumes, handling 339 mt of cargo in 2022-23. – The next largest private port player, JSW Infrastructure, has an annual installed capacity of 170 mt.

Expansion Strategy – APSEZ has consolidated its business through acquisitions, including Gopalpur port in Odisha. – The company aims to become the world’s largest port company by 2030.

End-to-End Logistics – APSEZ provides integrated port-cum-logistics services, transforming India’s port sector. – The company has developed India’s first and longest private railway line, connecting Mundra to Adipur.

Growth Timeline – 1998-2013: Local port operator in Gujarat – 2014-20: Pan-India port operator – 2021-23: Global port and/or terminal operator – 2024: Acquired Gopalpur port in Odisha

Gopalpur Port Acquisition – Gopalpur port will add 20 mt handling capacity. – The port handles a diverse mix of dry bulk cargo, including iron ore, coal, and limestone.

Maritime Power – APSEZ has established presence in all key maritime states on the east and west coasts. – The company has room for growth in states like West Bengal and Karnataka.

Monopoly Concerns – Experts believe that cargo will flow to ports that best meet requirements, irrespective of ownership. – The situation is similar to the airline sector, where Indigo holds a significant market share.

Urgent Need to Address Vacancies in SAT

The Securities Appellate Tribunal (SAT), the final arbiter of serious cases investigated by SEBI, is facing challenges due to a lack of bench strength. With only one technical member currently functioning, hearings have been adjourned and new appeals are piling up. This is not the first time SAT has been impaired by delays in appointments, leading to controversies and concerns about the validity of its orders. The Centre is urged to prioritize filling SAT vacancies and strengthen its composition to address the rising backlog of cases.

Key Points:

Lack of Bench Strength: – SAT has been functioning with only one technical member since December 2023. – The tribunal has been unable to pass final orders due to the absence of a presiding officer and a judicial officer.

Impact on Caseload: – Over 1,100 appeals were filed before SAT in FY23, with 758 pending by the end of the year. – Hearings have been adjourned and new appeals are piling up due to the lack of bench strength.

Previous Delays in Appointments: – SAT has faced similar challenges in the past, including a year-long vacancy in the technical member position in 2021-22. – Such delays have led to protests and concerns about the validity of SAT orders.

Need for Strengthening SAT: – The Centre is urged to fill SAT vacancies on priority to address the rising backlog of cases. – The tribunal should be strengthened by adding judicial muscle and ensuring the technical member has experience in the financial services industry.

Budget Promise: – The Finance Minister promised in 2016 to amend the SEBI Act to provide for more benches of SAT. – This amendment would help reduce the backlog and improve the efficiency of the tribunal.

Bank of India Faces Tax Demand of Rs 1,128 Crore

Bank of India has received a demand notice from the Income Tax Department for Rs 1,127.72 crore for the assessment year 2016-17. The bank is contesting the notice and expects the demand to be reduced.

Key Points:

Demand Notice:
- Bank of India received a demand notice for Rs 1,127.72 crore under Section 156 of the Income Tax Act, 1961.
Assessment Year:
- The demand pertains to the assessment year 2016-17.
Disallowances:
- The demand notice includes certain disallowances made by the Income Tax Department.
Appeal:
- Bank of India is filing an appeal against the demand notice with the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC).
Legal Grounds:
- The bank believes it has strong factual and legal grounds to support its position.
Expected Outcome:
- Bank of India expects the entire demand to be reduced.
Impact:
- The demand notice has no impact on the bank’s financial, operational, or other activities.
Recourse:
- Bank of India will avail recourse provided in the Income Tax Statute against the demand.

AI to Enhance Accessibility of Government Programs

The government plans to leverage artificial intelligence (AI) to enhance the reach of government schemes by enabling citizens to discover and access schemes they are entitled to. This AI-powered platform will provide personalized recommendations and help citizens identify schemes that align with their needs.

Key Points:

1. AI for Scheme Discovery: – AI will be used to help citizens find government schemes they are eligible for. – Citizens can currently only access details of schemes they have signed up for.

2. Personalized Recommendations: – The AI platform will provide personalized recommendations based on the schemes a citizen has already signed up for. – For example, if a citizen has signed up for the Pradhan Mantri Jan Arogya Yojana, they may be prompted to consider the PM Awas Yojana.

3. Saturation of Government Schemes: – The goal is to ensure that all citizens are aware of the government schemes they are entitled to. – This will be achieved by making it easy for citizens to discover and access schemes through the AI platform.

4. India Stack Foundation: – The expansion of public services through AI is built on the success of the India Stack, a digital public infrastructure. – The India Stack includes layers such as digital identification, payments, and data management.

5. International Collaboration: – India has partnered with 10 countries to implement the India Stack and include their citizens in various areas. – 22 other countries are interested in signing MoUs with India to expand the ecosystem.

6. Responsible and Ethical AI: – The government emphasizes the importance of responsible and ethical AI. – AI models and platforms must be safe and trustworthy for users. – Companies will be legally responsible for ensuring the safety and trust of their AI platforms.

Technology-Driven Farming: Uttar Pradesh Farmers Embrace Mechanization and Digitization for Bountiful Harvests

Uttar Pradesh’s agricultural sector has undergone significant transformation through mechanization, digitization, and government initiatives. Farmers are embracing drones, cluster-based hiring centers, and direct benefit transfers, leading to increased productivity, reduced input costs, and improved access to capital. While some farmers are using their newfound wealth for personal expenses, others are investing in farm machinery and value-added crops, ensuring long-term sustainability.

Key Points:

Mechanization and Digitization: – Drones and cluster-based hiring centers for tractors and drones have revolutionized agriculture in Uttar Pradesh. – Drones enable precise application of fertilizers and water, reducing waste and input costs.

Government Initiatives: – Pradhan Mantri Kisan Samman Nidhi (PM-KISAN) provides direct benefit transfers to farmers, creating a corpus of capital. – Distribution of quality seeds and procurement of produce have also contributed to increased productivity.

Training and Extension Services: – Training centers and mobile phone connectivity provide farmers with access to expert advice on pesticide usage and other agricultural practices. – Farmer producer organizations (FPOs) connect members to these facilities.

Diversification and Value Addition: – Farmers are growing vegetables and cash crops like mentha and ramdaana for higher profits. – Value addition through processing and marketing is also increasing farm income.

Investment in Farm Machinery: – Farmers are investing in farm machinery banks, with government subsidies, to enhance productivity and multiply earnings. – Laser levelers, drones, and tractors are being used to improve land quality and crop yields.

Need for Expanded Training: – While training programs have been beneficial, they need to be diversified and expanded to meet the growing needs of farmers.

Sikkim and Arunachal Pradesh: High Per Capita Income, but Limited Self-Reliance

Sikkim and Arunachal Pradesh, two northeastern states with higher per capita incomes than the national average, will hold Assembly elections on April 19. While Sikkim has a low multidimensional poverty rate, Arunachal Pradesh’s is close to the national average. Both states rely heavily on central resources and have low own tax revenues.

Key Points

Sikkim

Political Landscape: Incumbent Sikkim Krantikari Morcha (SKM) faces off against Sikkim Democratic Front (SDF), BJP, and Congress.
Economy: Dominated by agriculture and agro-based industries, with a per capita income thrice the national average.
Revenue: Relies heavily on central grants and share in divisible pool of taxes, with own tax revenue below 20%.
Inflation: Controlled retail price inflation and food and beverages inflation below national levels.
Multidimensional Poverty: Very low rate (2.6%) compared to national average (14.96%).

Arunachal Pradesh

Political Landscape: Ruling BJP faces off against Congress, NCP, NPP, and others.
Economy: Per capita income higher than national average but lower than Sikkim’s.
Revenue: Similar to Sikkim, relies heavily on central grants and share in divisible pool of taxes, with own tax revenue below 13%.
Inflation: Controlled retail price inflation and food and beverages inflation in rural areas below national levels.
Multidimensional Poverty: Marginally lower than national average (13.76% vs. 14.96%), with higher rates in urban areas.