Rate rise cycle at its peak: RBI deputy governor

RBI deputy governor Subir Gokarn, who is in charge of monetary policy at Mint Road, added that in RBI’s view, inflation is “trending down from the highs of 9% plus to something closer to 7%”

Mumbai: Stating that the January headline inflation at 6.55% is in line with its expectations, Reserve Bank of India (RBI) deputy governor Subir Gokarn on Tuesday said the data underline that the rate hike cycle is at its peak, reports PTI.

“It (headline inflation) is in our trajectory... till it matches our projection, it reinforces our belief that rate cycle has peaked,” Mr Gokarn told reporters on the sidelines of an event here.

Mr Gokarn, who is in charge of monetary policy at Mint Road, added that in RBI’s view, inflation is “trending down from the highs of 9% plus to something closer to 7%.” 

The data released on Tuesday said overall inflation has fallen to the 26-month low of 6.55%, courtesy a deflation in the food basket.

The apex bank, which ushered in a series of 13 consecutive hikes over a 19-month period till December last year to tame the uncomfortably high inflation, has put a year-end target of headline inflation at 6%.

However, in its monetary policy announcement on 24th January—where it cut the cash reserve ratio but kept its overnight lending rate unchanged—the RBI articulated a shift in focus from inflation to growth in its monetary stance.

Mr Gokarn flagged jump in oil prices and the possibility of food inflation going back into positive territory as the future potential difficulties.

The non-food manufacturing inflation, which stood at 6.49% year-on-year, is also broadly in line with RBI projection, Mr Gokarn said.

In its last policy review, the RBI had cut CRR or the percentage of deposits banks have to park with RBI, by 0.50% due to pressure on liquidity while analysts are expecting it to cut its policy rate at March or April review.

When asked about the possibility of another CRR cut as the liquidity continues to be beyond the comfort zone with banks drawing almost Rs1 lakh crore through the overnight window, Mr Gokarn evaded direct reply.

In the backdrop of RBI pitching for concrete steps to carry out fiscal consolidation, Mr Gokarn said the Union Budget was an opportunity to bring a change.

“Typically, populist steps, if any, are taken in the last budget. This year and next year provide opportunity for fiscal consolidation,” he said.

When asked about growing concerns about asset quality among lenders, Mr Gokarn attributed the jump to sectoral issues, migration of NPA calculation to system-based approach and macroeconomic weaknesses.

He said the issues regarding asset quality will be addressed at the bankers’ meeting with his colleague deputy governor KC Chakrabarty scheduled for later this month.

User

Timely action saved illegal transfer of Rs66k crore: FM

“The Directorate of Transfer Pricing in the ministry of finance helped in saving Rs66,085 crore during the last year by timely stopping the illegal transfer of money through transfer pricing,” finance minister Pranab Mukherjee said at the meeting of Central Direct Taxes Advisory Committee

New Delhi: Finance minister Pranab Mukherjee on Tuesday said timely action by the revenue authorities prevented illegal transfer of Rs66,085 crore by multinational companies in 2010-11, reports PTI.

“The Directorate of Transfer Pricing in the ministry (of finance) helped in saving Rs66,085 crore during the last year by timely stopping the illegal transfer of money through transfer pricing,” he said at the meeting of Central Direct Taxes Advisory Committee (CDTAC) here.

Multinational companies use transfer pricing for products and services in cross-border trade between their related entities to shift profits to countries with low tax rates. In the process, countries lose tax revenue.

Mr Mukherjee said the government has taken several steps to unearth black money and legislative measures to obtain banking information—through Double Taxation Avoidance Agreements (DTAAs) and Tax Information Exchange Agreements (TIEAs)—are being negotiated. As many as 25 tax treaties have been concluded for improved exchange of information.

He told CDTAC members, representing different fields, about the government’s intent to develop and inculcate a tax structure which would encourage people to voluntarily pay taxes, while tax administration acts as a facilitator.

“Initiative of the government is to provide citizen centric governance in order to improve taxpayer services and redressal of public grievances,” Mr Mukherjee said.

Members suggested extension of deduction for investment in the infrastructure bonds for at least one more year and increasing the limit under it to Rs50,000, from Rs20,000 at present, an official statement said.

Members also suggested steps to curb black money in real estate transactions, provide relief to the salaried tax payers by retaining the standard deduction under Section 16 of the Act for a sum of Rs50,000 and extending the benefit of nil TDS to NBFCs.

CBDT chairman Laxman Das said the department is setting  up another Central Processing Centre at Ghaziabad to process TDS returns and it will result in reduction of TDS mismatches during the processing of tax returns.

User

MCX to hit capital market with IPO on 22nd February

The offer would comprise of sale of about 64.27 lakh shares, accounting for a 12.6% stake in the company. While the price band for the IPO is yet to be fixed, sources said that the IPO could raise Rs650-Rs750 crore

New Delhi: Multi Commodity Exchange (MCX), India's largest commodity bourse, will hit the capital market next week with an estimated Rs650-Rs750 crore initial public offer (IPO) on 22nd February, becoming the first ever IPO by an exchange in the country, reports PTI.
    
The bidding for shares in the IPO process would begin on 22nd February and close on 24th February, the company said in its Red Herring Prospectus, the final document for the offer.

While the price band for the IPO is yet to be fixed, sources said that the IPO could raise Rs650-Rs750 crore.

This could also be the first IPO of the calendar year 2012.

The offer would comprise of sale of about 64.27 lakh shares, accounting for a 12.6% stake in the company. This would include 2.5 lakh shares reserved for employees.

Besides the promoter Financial Technologies (India), shares would also be sold by other shareholders like State Bank of India, Corporation Bank, Bank of Baroda, ICICI Lombard General Insurance, GLG Financials Fund and Alexandra Mauritius in the IPO.

The shares would have a face value of Rs10 each, while the premium would be calculated later.

MCX said in its RHP that the IPO has been assigned top-most grading of '5/5' by Crisil, indicating strong fundamentals. The IPO grading is assigned on a five-point scale from 1 to 5, with IPO Grade 5/5 indicating strong fundamentals and IPO Grade 1/5 indicating poor fundamentals.

The company further said that the equity shares are proposed to be listed on the BSE and it has received in-principle approval from the BSE for the listing.

Last week, MCX chairman Venkat Chary had said that the company’s IPO would be game changer in the stock market and would lift the sentiment from the current slump. “This IPO will lift all the boats,” he had said.

The IPO could give the exchange the market value of over Rs5,000 crore.

The promoters—FTIL—currently holds 31.2% stake in MCX, which would come down to about 26% after the IPO.

MCX, the largest commodity bourse in the country, has more than 70% share in an annual estimated turnover Rs177 lakh crore for the entire commodity derivatives market.

Globally, MCX is the fifth largest commodity exchange, while it figures among the top two positions in gold and silver segments.

It would be the first exchange in India to go public, putting the country at par with other markets like the US, UK, Japan, Australia, Singapore and Hong Kong.

MCX had recorded Rs447.5 crore of total income and Rs176.2 crore of net profit in the fiscal year ended 31 March 2011. In the current fiscal, the company has posted net profit of Rs218 crore and total income of Rs474 crore for the nine-month period ended 31 December 2011.

User

We are listening!

Solve the equation and enter in the Captcha field.
  Loading...
Close

To continue


Please
Sign Up or Sign In
with

Email
Close

To continue


Please
Sign Up or Sign In
with

Email

BUY NOW

The Scam
24 Year Of The Scam: The Perennial Bestseller, reads like a Thriller!
Moneylife Magazine
Fiercely independent and pro-consumer information on personal finance
Stockletters in 3 Flavours
Outstanding research that beats mutual funds year after year
MAS: Complete Online Financial Advisory
(Includes Moneylife Magazine and Lion Stockletter)