Alternative Investment
Sovereign Gold Bond scheme tranche 3 yields only 1,128 kg
New Delhi : The third edition of the Sovereign Gold Bond (SGB) scheme, a component of the government's market borrowing programme, received a poorer response than the last round, getting a subscription of 1,128 kg gold, amounting to Rs.329 crore, an official statement said on Friday.
 
More than 64,000 applications have been received in the third round, but the actual figure may vary as comprehensive information from all the authorised receiving agencies is under compilation, said the finance ministry statement.
 
"Trend during the third tranche of SGB shows that the scheme is gradually picking-up amongst the investors with increase in awareness and more clarity about the provisions of the scheme," the statement added.
 
These bonds, being sold through banks, the Stock Holding Corporation of India Ltd. (SHCIL) and designated post offices, will be issued on March 29.
 
The government received subscriptions of Rs.726 crore for 2,790 kg gold under the second tranche of the scheme in January, while the first tranche of sovereign gold bonds launched in November had received a subscription for 915.95 kg of gold worth Rs.246 crore.
 
The gold bonds are issued in denominations of 5 grams, 10 grams, 50 grams and 100 grams for a term of 5-7 years with a rate of interest to be calculated on the metal's value at the time of investment. The scheme has an annual ceiling of 500 grams per person.
 
Prime Minister Narendra Modi had last November launched the gold scheme aimed at reducing demand for the metal in physical form by encouraging people to buy gold in the demat or paper form.
 
India's gold imports increased to $26.45 billion during the April-December period of the current fiscal, as compared to the $25.85 billion worth imported in the same period of last year.
 
In Budget 2016-17, Finance Minister Arun Jaitley has proposed that redemption of these gold bonds be exempt from capital gains tax, as also that long-term capital gains arising on their transfer be eligible for indexation benefits.
 
Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.

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Over five lakh transactions in Mallya money trail, finds CBI
New Delhi : The CBI has started tracking the money trail of all the transactions and loans taken by business tycoon Vijay Mallya and Kingfisher Airlines (KFA) totalling Rs. 7,000 crore since 2004.
 
 
"Our prime focus is to find out the money trail of loans flowing in from all the 17 banks to the accounts of Mallya, his other associates, his defunct airline (Kingfisher Airlines) and others." a CBI source told IANS. 
 
The source said only by trailing the money will they be able to find its use or misuse.
 
"We have to reach the final destination of the money to find out if the borrowings were used by Mallya for other purposes, the source said. 
 
Officials looking to trace the money had found that over five lakh transactions had been made in several accounts. 
 
Over 60 per cent of the five lakh such transactions -- around three lakh -- had been diverted to accounts in four countries, the source said.
 
The CBI is in touch with different agencies through various channels to find out the assets that Mallya may own in the four countries. It is also seeking further details of the transactions abroad. 
 
The CBI has expanded the ambit of the probe to 16 more public sector banks from which Mallya and KFA had borrowed money since 2004. 
 
So far, the CBI has been investigating defaults worth Rs. 900 crore on loans taken from IDBI during October-November 2009. 
 
None of the 17 banks has, however, filed a complaint with the CBI as yet. The agency had registered a case in July 2015 under provisions related to criminal breach of trust and criminal conspiracy in the Indian Penal Code (IPC) and some sections of Prevention of Corruption Act. 
 
The agency had filed the case against Mallya, KFA, the firm's then chief financial officer A Raghunathan and unknown IDBI Bank officials. 
 
The CBI source said that IDBI had been informed about the wrongdoings twice -- first in 2012 and then in 2014. 
 
"In early 2016, we also informed the United Bank of India that loans may have been misused. But neither of the banks approached us with any complaint," the source said.
 
CBI's expanded its probe a week after Mallya left the country on March 2. 
 
Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.

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Political, public outcry as PPF, NSS and saving scheme rates cut
New Delhi : In a decision that evoked immediate uproar by the salaried and self-employed class, the government on Friday slashed the interest rates on public provident fund (PPF) from 8.7 percent to 8.1 percent, soon after retracting the unpopular proposal to partially tax withdrawals.
 
In the process, the interest rate for the national savings scheme was also reduced sharply from 8.5 percent to 8.1 percent, for Kisan Vikas Patra (KVP) from 8.7 percent to 7.8 percent and for five-year recurring deposit to 7.4 percent from 8.4 percent.
 
Even the girl child scheme Sukanya Samridhhi Account (SSA) was not spared. The cut: From 9.2 percent to 8.6 percent.
 
"The new rates will be effective from next fiscal (April 1, 2016). The interest will be calculated on quarterly basis," A.K. Chauhan, joint director in National Savings Institute (NSI), told IANS.
 
According to him, the main reason for the downward revision was the two year yield on government securities (G-Sec) had gone down.
 
The interest rates for various small savings schemes were recalculated with reference to the G-Sec yields of equivalent maturity for the period December 2015-February 2016, and based on it, rates on various schemes for 2016-17's first quarter have been notified.
 
According to the government, the quarterly revision of interest rates will ensure that the interest rates under small savings schemes are more dynamically related to current market rates, thereby enabling the banks to move their interest rates in line with current money market rates.
 
Chauhan said the total corpus of all small savings scheme was around Rs.300,000 crore. The net accretion this year was around Rs.65,000 crore till January 31.
 
The SSA has around 85 lakh accounts with a deposit of around Rs.3,500 crore, while the KVP corpus is over Rs.21,000 crore, Chauhan said.
 
Earlier, the government had proposed a tax on 60 percent of the PPF corpus on maturity if it was not invested in annuities - that is schemes that fetch periodic returns.
 
Also proposed was a limit on monetary contributions of employers in provident fund to Rs.150,000 per annum for tax sops.
 
Both these were withdrawn.
 
The government also cut interest rates on other small savings term deposit schemes.
 
The small savings interest rates are perceived to limit the banking sector's ability to lower deposit rates in response to the Reserve Bank of India's monetary policy, the government said last month.
 
Interestingly the rate of interest on the Employees Provident Fund (EPF) is 8.8 percent.
 
"The self-employed are hit by this move. For them the PPF is the one safe mode of investment. Now the return has come down," N.Varadarajan, a self-employed person, told IANS.
 
Meanwhile the decision led to a big public outcry on microblogging site Twitter.
 
"Bleed the ones who pay tax! This #ppf rate cut by #Modi government is so not on, Anti national!," tweeted Vijaita Singh.
 
Sharing similar sentiments, another net-savvy citizen Sudhanshu S. Singh tweeted: "What's this? Interest rate on PPF has been cut to 8.1%. Where should common people invest for safe earning."
 
Sagar Kumar Jain took a potshot at Prime Minister Narendra Modi's government, tweeting: "Modiji has to offer something to common man, everyday!! PPF interest rate cut drastically. Difficult to see Lotus in assembly post 2019."
 
Some of the postings were especially directed against Finance Minister Arun Jaitley.
 
"EPF tax or PPF interest: Why is Arun Jaitley anti-common man? Being a billionaire he can't understand poverty?," went an equally angry tweet from Bharatha10.
 
The opposition also opposed the government's decision.
 
"Government's decision to cut PF interest rates is unfortunate.Why are they taking away one of the last avenues of savings in a depressed economy?" Congress leader Ahmed Patel tweeted.
 
Party spokesperson Randeep Singh Surjewala, in a statement, said: "It is a criminal breach of trust with hapless people who put their money in the custody of the government of India with the belief that they will not be cheated." 
 
Communist Party of India-Marxist (CPI-M) general secretary Sitaram Yechury also hit out, tweeting: "Small savers are the backbone of our savings. With no social security net, they rely on such guaranteed returns."
 
Economist Ashwaini Mahajan, also the co-convenor of Swadesh Jagran Manch, also criticised the move, saying it will "leave an adverse impact on the domestic saving".
 
"As a student of economics, I feel the authorities must reconsider about the decision. I do not think there was enough and good ground at the moment to slash the interest rate on the PPF," Mahajan told IANS.
 
Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.

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COMMENTS

MG Warrier

1 year ago

There is an urgent need to have a re-look at the approach of GOI to retirement savings. It is unfortunate that different pressure groups argue for reducing rate of return on savings from different angles and GOI succumb to such pressures without weighing the impact on social security cover for which savers invest in most of the long term savings instruments like PPF and various savings options offered under National Savings Schemes. The combined corpus under such schemes constitute less than 10 per cent of the deposits with banks.
Beyond tax savings, investors under these schemes look at their stable nature in regard to security of investments and regular assured returns. Considering their role in providing financial security for elders and acting as a source of liquidity when earnings fluctuate in the present uncertain employment market, there is a strong case for ensuring a rate of return on such investments, higher than that available on bank deposits. The recent SBI research report suggestion to consider differential (higher) rates for savings in the accounts of elders and in age-groups above 45 years is worth looking at. Another group which may deserve differential treatment may be those who are not investing in these instruments for income tax benefit.
A related issue is professionalism in management of funds flowing into governments’ kitty which now come from captive sources like LIC, EPFO, banks(SLR deposits), National Savings Schemes and PPF. As these funds are used by government and no investment risk prevalent in money with the banking system is to be factored in, it is natural that savers expect a higher rate of return on investment in such financial instruments. Any thought of relating interest rates on investments in such instruments with bank interests is unacceptable.
M G Warrier, Mumbai
[email protected]

Rahul Chatterjee

1 year ago

It appears that the present government's alienation with the masses is complete. The way they are fleecing common people with indirect taxes it cannot be imagined.Surreptitiously they are taking money from us and we are mute spectators. While every country is enjoying the benefits of low crude oil prices, our government is busy collecting excise duty to improve budget deficit. The question is to be asked is why not popular social schemes of the government is being reviewed. Is the benefits of those programmes really trickling down to the masses? The present government has nothing new to offer except for slogans. They have gone back on all their election promises. Common people have to wait and watch.

Silloo Marker

1 year ago

The rate cuts on small savings and PPF hit senior citizens the hardest and should be withdrawn immediately. If not, let the BJP government beware the power of the vote-bank consisting of ever-growing numbers of senior citizens.

Gopalakrishnan T V

1 year ago

The BJP is bankrupt of ideas on as to how to improve and strengthen the economy. It looks obsessed with augmenting revenues at any cost ignoring the need to nurture the savings which are very essential to provide the support system for the economy to grow. Unfortunately the Government has a tendency to sideline the middle class with whose support it came to power. The Government very badly treated them in the budget recently announced and no tax benefit has been given. The savings of the Community have been on the decline since the new Government came to power despite a tall claim of a decline in inflation. The taxes have been on the increase and honest tax payers are taken for a ride by the Government. The black money holders thrive and enjoy life and avenues are getting created to escape taxes by allowing mushrooming growth of tax evaders in the economy. Many money spinners do not seem to be knowing the existence of something called Income Tax. Fudging of accounts and false reporting are encouraged left and right without any check or accountability. Corporates collect various types of taxes but how correctly they report and pay the taxes to Government no one Knows.Salaried class in particular and honest tax payers are taken to task and their grouse against the government is growing day by day. Perhaps the next election will show the impact. The Government's dependence on the bureaucracy who still seem to be maintaining its loyalty to the previous Government also seems to be taking this Government for a ride.

Middle Class

1 year ago

Death knell for BJP, Modi, JaiItaly. Mark my words, when the middle class comes to vote in masses for 2019, you will be wiped out. Now carry on with your retarded policies, swatch bharat/aadhar/gst bull-crap... enjoy while you have majority. A lesson learnt, never give full majority to BJP, NEVER! When you do, these ass-clowns will either rob you or, eventually bleed you dry.

V ganesan

1 year ago

Before the parliment election the PM promised bringing back the black money from abroad.Till date nothing happened .Lot of peple started rd for their short term goals But their calculation misfired.Let the govt first collect money from CAIRN VODAFONE VIJAY MALLYA LANCO JP ASSOCIATESETC FIRST.

REPLY

Middle Class

In Reply to V ganesan 1 year ago

BJP should be read as Bhartiya Jumla Party. In the pretext of bringing black money back, JaiItaly has asked the taxpayers to declare all bank accounts in ITR.

V ganesan

1 year ago

The government is looking to align every financial investment tobe discovered by market forces.Only in newspaper and media inflation is down for several months.But in real common man life actual inflation is in double digit.MY son education fee increased by 50 percent my mobile operator raised the bill by 25 percent Pulses and cereals moved more than 50 percent but prices of pulses and cereals not come down after the big move.Recently sugar prices started rising .I am sure the speculators will rig up sugar price in a big way.Medical bill also shooting up.The government should consider all these aspects into mind.Otherwise in the next general election BJP will certainly loose power.At the same time these measures will bring fruit over long time but person should live today to reap tomorows fruit.

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