• Life Insurance Corporation(LIC), the largest insurance company in India, got 12 years from RBI for cut down stake in IDBI Bank.LIC is the lender’s major shareholder, and it has a 51 per cent stake in the Bank. It means that no obligation to sell its stake in the following years or would probably spend higher money to keep its stake in any future fund raising by the bank.

• Insurance Regulatory and Development Authority (IRDAI) claimed that LIC can take up to 15 percent stake in any bank,which can stretch up to 30 percent as per the board approval.But the insurance regulator has authorised LIC to hold up to 51 percent in IDBI Bank in 2018.

• After 12 years LIC has to decrease stake in IDBI Bank by 10 per cent to 40 per cent.

• The development means that LIC would be under no obligation to sell its stake in next few years or so and would probably invest more money to retain its stake in any future fund raising by the bank. 

• The e insurance regulator’s rules stipulate that LIC can hold only up to 15 per cent in a bank which can go up to 30 per cent in case of board approval. But the Insurance Regulatory Authority of India (Irdai) allowed LIC to invest up to 51 per cent in IDBI Bank last year. The regulator also did not insist publicly on a deadline for LIC to cut its stake in Corporation BankNSE 0.36 % when it invested more than 10 years ago. The insurer held nearly 26 per cent at one time which has now come down to 3 percent.

 

 

• Asian Development Bank (ADB) agreed to provide a total of USD 3.88 billion in sovereign loans to India in 2018, which is the highest ever loan amount since sovereign operations began in the country in 1986.

• With this total USD 21.6 billion in loans, granted from ADB’s own resources, which exceeded the target of USD 19.71 billion and up 10 percent from 2017.

• ADB committed several projects like a USD 100-million loan to Ostro Kutch Wind, which is a renewable energy company for constructing and operating a 250-megawatt wind power project in Gujarat, also provided USD 30 million in equity and USD 20 millionin debt security to Annapurna Finance, a microfinance company.

• In 2018, ADB signed an arrangement with the International Solar Alliance for promoting solar energy deployment across Asia, the Pacific, and South Asia.

• ADB continued to deliver climate financing to USD 3.6 billion in 2018 and has a target to double its annual climate financing to USD 6 billion in approvals by 2020.

 

 

• United Nation Secretary General (UNSG) Antonio Guterres voiced concern that the UN owes India USD 38 million, the highest amount which has to be paid by any country for peacekeeping operations as of March 2019.

• Till now, the total amount which has to be paid to troops and police-contributing countries (TCCs/PCCs) with respect to active peacekeeping missions was USD 265 million. Out of this, the UN owes USD 38 million to India, followed by Rwanda (USD 31 million), Pakistan (USD 28 million), Bangladesh (USD 25 million) and Nepal (USD 23 million).

• This dues to troops and police-contributing countries could increase to USD 588 million by June 2019 in the worst case scenario.

• At the end of 2010, UN had a positive cash balance of USD 412 million but in 2018 it finished with a negative cash balance of USD 323 million – a decline of USD 735 million in last 8 years.

• 73 member states had paid their full contributions by the end of the first quarter in 2017 and 2018, as compared to 62 members in 2016 and 67 in 2015. In 2019, 74 member states have paid their full contributions.

• By the end of 2017/18 peacekeeping fiscal year, outstanding contributions to peacekeeping operation amounted to almost USD 2 billion which is well above the USD 1.3 billion unpaid as on June 30, 2017. The UN Chief ask the General Assembly to increase the Working Capital Fund to USD 350 million effective July 1, 2019, and to create a Peacekeeping Working Capital Fund of USD 250 million and authorize its use to address the liquidity challenges of active peacekeeping operations. This will help in improving the financial health of the world body and deal with the timely payment of dues to troop and police contributing countries.

 

 

• Three influential US lawmakers have urged the Trump administration to oppose the proposed multi-billion bailout package being sought by Pakistan from International Monetary Fund. They have argued that the bailout package could be used to repay the Chinese debt accumulated under the China-Pakistan Economic Corridor (CPEC). 

• In a letter to US Treasury Secretary Steven Mnuchin and Secretary of State Mike Pompeo, the bipartisan group of three lawmakers - Ted Yoho, Ami Bera and George Holding - expressed their deep concern over the likely use of the IMF`s bailout package. They said that China is investing 62 billion US dollars in Pakistan under the CPEC.  They also pointed out that the CPEC`s debt repayment and profit repatriation terms are not transparent.

• The letter said that the impact of Chinese predatory financing in Pakistan, as already seen in the case of the Hambantota port in Sri Lanka, cannot be ruled out. It also said out that under Chinese pressure, Sri Lanka handed over 1,500 acres of land around the port for a 99-year lease.

• Noting that Pakistan`s history with the IMF gives further cause for concern, the US lawmakers said having spent 22 of the past 30 years in a dozen different IMF bailout programs, Pakistan has failed to carry out necessary structural economic problems.

 

 

• Central Board of Direct Taxes (CBDT) has rejected media report which claimed that there had been a spike in the number of income tax stop filers in the year of demonetization. It has termed the report as false and baseless.

• In a statement, the CBDT said, it added 1.07 crore, new taxpayers, while the number of dropped filers came down to 25.22 lakh in 2017-18, showing the positive impact of demonetisation. 

• Around 6.87 crore Income Tax Returns were filed during the financial year 2017-18 as compared to 5.48 crore filed during  2016-17. The CBDT asserted that the note ban had a  positive impact on the widening of tax base and direct tax collections. 

• An English daily had reported that there was an increase in the number of stop filers by almost tenfold in the year government demonetised high-value currency notes. 

 

 

• Reserve Bank of India(RBI) has come out with guidelines for banks to set up new currency chests, which include minimum area of 1,500 square feet for strong room. 

• The RBI said that the new chests should have a processing capacity of 6.6 lakh pieces of banknotes per day. It added that for those situated in the hilly/ inaccessible places, capacity should be 2.1 lakh pieces of banknotes per day. 

• Earlier, a RBI appointed committee had recommended that the apex bank should encourage banks to open large currency chests with modern facilities and Chest Balance Limit (CBL) of at least Rs 1,000 crore.

 

 

• The rupee appreciated by 12 paise to 69.05 against the US dollar in opening trade driven by the weakening of the greenback in overseas markets and higher opening in domestic equities.

• Meanwhile, the benchmark BSE Sensex was trading higher by 195  to quote at 38,880 while the NSE Nifty was trading at 11,660 up by 62 points in the early trade.

• Firm global equity markets lent some support to the currency on the last trading day of this week. Equity benchmark indices in the US and Asia turned green amid positive updates on trade talks between the US and China, especially after China’s President Xi Jinping said substantial progress has been made in trade talks with Washington.

• Equity benchmark indices in India were also trading in the green with the Sensex gaining 163 points at 38,848 levels. The Nifty also rose 54 points to trade at 11,652 levels, on its way to reclaiming the key level of 11,700. 

• The currency depreciated 76 paise as the Reserve Bank of India (RBI) seeded doubt regarding India’s economic growth concerns. Additionally, Fitch, a US-based credit rating agency, retained India`s sovereign rating at `BBB-`, the lowest investment grade, with the stable outlook, media reports stated.

• The agency in its report said that a weak fiscal position continues to constrain its rating. This is the 13th year in a row that global rating agency Fitch has rated India at `BBB-`. It had last upgraded India`s sovereign rating from `BB ` to `BBB-` with a stable outlook on August 1, 2006.

• On the global front, increased crude oil prices also fueled the fire. The international crude oil benchmark, Brent oil touched its key level of $70 per barrels in the first time since November 2018.

 

• After acquiring majority stake in REC Ltd (formerly Rural Electrification Corporation Limited), centre backed Power Finance Corporation (PFC) has become the India’s second largest Govt-owned Financial Firm after State Bank of India (SBI), based on market capitalization.

• PFC has bought the 52.63% controlling stake in REC through Rs 14,500 crore deal with Union government.

• The REC’ shares were acquired at Rs139.50 per equity share price. 70% of the deal was financed through cash inflows and the balance through debt.

• This acquisition has impacted union government beneficially, as it exceeded the disinvestment target of Rs 80,000 crore for the fiscal year 2018-19.

• Power Finance Corporation Ltd.  is an Indian financial institution. Established in 1986, it is the financial back bone of Indian Power Sector. PFC`s Net worth as on 30th September 2018 is INR 38,274 Crore . PFC is the 8th highest profit making CPSE as per the Department of Public Enterprises Survey for FY 2017-18.

 

 

• Goods and Services Tax (GST) authority, the Central Board of Indirect Taxes and Customs (CBIC) clarified that in case of death of the sole proprietor, there will be transfer or change in the ownership of business. 

• The transferee or the successor will be required to register with effect from the date of transfer or succession of business to another person for any reasons including death of the proprietor. 

• The applicant will be required to mention the reason to obtain registration as death of the proprietor in the registration form.

• The legal heir of the dead sole proprietor will be required to give application for cancellation of the existing registration. 

• The GST Identification Number (GSTIN) of transferee is also required to be mentioned to link the GSTIN of the transferor with the GSTIN of transferee. 

 

 

• Fitch Ratings cut India’s economic growth forecast for the next financial year starting April 1, to 6.8% from its previous estimate of 7%, on weaker than expected momentum in the economy.

• We still see Indian GDP growth to hold up reasonably well, at 6.8%, followed by 7.1% in FY21,” Fitch said in its Global Economic Outlook.

• Fitch Ratings cut India’s FY19 GDP growth forecast to 7.2% from 7.8% on December 6.

• The rating agency has also cut growth forecasts for FY20 and FY21 to 7% from 7.3% and 7.1 per cent from 7.3%, respectively.

• Fitch said, it’s benign oil price outlook and expectations of accelerating food prices in the coming months should support rural households’ income and consumption.

 

 

• RBI governor bats for permanent status to Finance Commission.

• Finance commissions have over the past several decades adopted different approaches with regard to principles of tax devolution, grants to be given to states and fiscal consolidation issues. In other words, there has to be continuity and change between finance commissions.

• There is a need to ensure broad consistency between Finance Commissions so that there is some degree of certainty in the flow of funds, especially to the states. This has become even more critical in the post GST scenario.

• If it is given permanent status, the Commission can function as a leaner entity in the intervening period till the next Finance Commission is set up in a full-fledged manner. During the intervening period, it can also address issues arising from implementation of the recommendations of the finance commission.

 

 

• NITI Aayog organised a day-long FinTech Conclave at Dr Ambedkar International Center, New Delhi.

• The objective of the conference was to shape India’s continued ascendancy in FinTech, build the narrative for future strategy and policy efforts, and to deliberate steps for comprehensive financial inclusion.

• The Conclave featured representatives from across the financial space - central ministries, regulators, bankers, startups, service providers and entrepreneurs.

• The Conclave was inaugurated by RBI Governor Shaktikanta Das.

• The Conclave will be inaugurated by Governor, RBI and will be attended by senior government officials, including Secretary (Department of Economic Affairs), Secretary (Department of Financial Services), Chairman (SEBI), Secretary (MeitY), Secretary (Department of Revenue), Secretary (MSME), Deputy Governors of RBI, among others. 

• Conclave will host more than 300 representatives from the leading Financial Institutions including HDFC Bank, IndusInd, ICICI Bank, SBI Card, Tata Capital and FinTechs including BankBazaar, PhonePe, Capital Float, Zerodha, PayTM, MobiKwik, PayU, leading venture capital investors, state governments, MSMEs and industry subject matter experts. The valedictory session of the conclave shall include presentations consolidating sector-specific findings of the various breakout panels on themes such as Digital Onboarding of Customers/Merchants for Financial Inclusion, Building Financial Products for Millennial India, Emerging Areas of FinTech, Fast Tracking Investments in FinTech Industry and Financial Inclusion of MSMEs.