Citizens' Issues
Fadnavis govt to wait for GST before scrapping LBT in Maharashtra

Scrapping of LBT was featuring prominently in BJP's poll manifesto for the recently concluded Assembly elections and yet Maharashtra government now want GST to be introduced first

 

The Maharashtra government is unlikely to scrap the local body tax (LBT) unless the union government introduces the goods and services tax (GST). However, scrapping of LBT was featuring prominently in BJP's poll manifesto for the recently concluded state Assembly elections.

 

"Yes, we did include scrapping of LBT and thereby bring cheer to traders in our poll manifesto. We remain committed towards fulfilling our promise. But at the same time how can we ignore the current financial condition of the state," state Finance Minister Sudhir Mungantiwar told reporters.

 

He added that Maharashtra, which was once considered to be a financially sound state, is now reeling under a debt of Rs3.44 lakh crore. When the situation is so bad, shouldn't it be priority (of the government) to improve the fiscal condition of the state, he added.

 

Traders across the state have been demanding to scrap the LBT for some time and also held protests.

 

"We have the LBT and the octroi which is providing a revenue of Rs14,500 crore to the exchequer annually. When we abolish these revenue sources, we need to find out an alternate source of revenue generation first," Mungantiwar added.

 

He said the Centre is keen to implement the GST from 2016 and reimburse the state with the difference in the revenue once it is implemented here.

 

Chief Minister Devendra Fadnavis said, "Say if we manage to collect only Rs8,000 crore from GST, the Centre will provide us with the remaining Rs6,500 crore so that we get the same revenue as we currently get from octroi and LBT."

 

"We have two options before us. Either we increase our tax collection by coming out with an alternative to LBT and octroi, or we wait for a year till GST will be introduced. I will explain the technical problems to the trade Union and try to convince them to wait for a year till we introduce GST," he said.

 

Mungantiwar echoed Fadnavis's views and said the state may consider postponing the scrapping of LBT and Octroi by a year.

 

Fadnavis has also called a meeting of traders after which he may announce his decision on LBT.

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Allegations against CBI director has 'some credibility' says SC

Supreme Court observed that seemingly the allegations made by Centre for Public Interest Litigation against CBI Director Ranjit Sinha had 'some credibility'

 

Ticking off the Central Bureau of Investigation (CBI), the Supreme Court on Thursday observed that apparently 'all is not well' and seemingly the allegations made by Centre for Public Interest Litigation, the non-government organisation (NGO) against CBI Director Ranjit Sinha has 'some credibility'.

 

"For us, it appears that all is not well and prima facie it seems that allegations made in the application by NGO has some credibility," the apex court said while hearing the case related to allegations by the NGO that Sinha might have tried to save some accused in 2G spectrum scam.

 

On Wednesday Sinha had told the apex court that DIG-rank CBI officer Santosh Rastogi was a 'mole' who passed on certain file notings and documents to the NGO on the basis of which baseless and false case was filed against him.

 

Special Public Prosecutor Anand Grover Thursday said that Sinha had interfered in the 2G case which is completely inconsistent with the agency’s stand.

 

"Our case in 2G could have been demolished, if Sinha's stand was accepted," Grover told the highest court.

 

The SC also said that shifting Rastogi from 2G probe was overreach of its order.

 

The Apex court also expressed displeasure over the presence of a number of CBI officers in the court room.

 

Around eight CBI officers were present in the court room, all of whom left after the SC's observation.

 

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Kotak Mahindra Bank acquires ING Vysya Bank
Shares of both Kotak Mahindra Bank and ING Vysya Bank hit their 52-week high on Thursday following news reports about the possible merger between the two lenders. The acquisition was later confirmed by Uday Kotak via Twitter
 
Private lender Kotak Mahindra Bank Ltd Thursday said it acquired ING Vysya Bank Ltd. No financial details were immediately available.
 
Uday Kotak, executive vice chairman and managing director of Kotak Mahindra Bank, tweeted "Kotak Mah Bank & ING Vysya Bk Merger Subject To Approvals. Will Work To Create Stakeholder Value".
 
Earlier, shares of Kotak Mahindra Bank and ING Vysya Bank hit their 52-week high on Thursday following media reports about possible merger between the two lenders. Before the annoucement, Kotak Mahindra Bank closed 7.28% up at Rs1,157 while ING Vysya ended the day 7.15% higher at Rs814.2 on the BSE. Both the scrips hit their 52-week high today. The 30-share benchmark Sensex closed Thursday flat at 28,067.
 
According to a report from Economic Times, Kotak Mahindra Bank was in the final stages of acquiring ING Vysya Bank. The news article indicated a merger ratio of two shares of Kotak Bank for every 2.5 shares of ING Vysya, implying a market cap of Rs165 billion for ING Vysya.
 
Both BSE and National Stock Exchanges have sought clarification from the lenders about the news report. In its reply to BSE, ING Vysya Bank had said, "We are aware of the Company's disclosure obligations under Clause 36 of the Listing Agreement. The Company will abide by its obligations to make appropriate disclosures as and when such disclosures are necessitated by decisions taken by the Company."
 
In a research note, Nomura said, the merger between Kotak Mahindra Bank and ING Vysya would be a 'happy marriage' as it could fill many gaps for Kotak Mahindra Bank. "Our Neutral rating for Kotak has been more valuation-driven, currently 3.25x September 2016 book. An acquisition of ING Vysya strategically would make sense, and if it happens at valuations which are about 10% EPS/ book accretive, then we would be incrementally positive on Kotak Bank," it said.
 
Here are a few points mentioned by Nomura in its report on the possible merger between the two lenders...
 
Low geographical overlap: An acquisition will increase Kotak’s number of branches about 2x (from 600 branches in FY14 to ~1,200 branches). Except for some metro locations, branch overlap will be very low with ING Vysya having 66% of its branches in South India and Kotak having 68% of its branches in West and North India.
 
Access to business banking/SME platform: Kotak is still largely an urban retail platform (50% of loans), while ING Vysya’s key strength is in SME/business banking (about 38% of loans) – this closes the vital product gap for Kotak as currently SME is just 8% of its loans.
 
Liability mix very similar: CASA ratios for Kotak and ING Vysya at 32-33% are very similar, but since SME banking is CASA-heavy, liability franchise in the long run would benefit.
 
Value-accretive way of diluting promoter stake: With the acquisition, promoter holding in Kotak will come off from about 40% to 33.5% and help partially comply with RBI’s deadline on promoter stake reduction.

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COMMENTS

MG Warrier

2 years ago

Financial sector, in which banks are major players, is facing several challenges. Private –public sector divide, or old-new differentiation or even size may not cover up the inadequacy of a national policy guidance for conduct of business in this sector. Now, problems, of bad management, of stress arising from weaknesses in regulation and supervision and most importantly-and this affects public sector banks more- external pressure are being handles on a crisis management basis as and when they crop up. There need to be conscious effort from Reserve Bank of India to address structural and policy issues with a holistic approach viewing the financial sector as one entity and its health as something which cannot be compromised for ‘popular’ or ‘business’ interests of government and corporates.

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