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And now, many firms are unsure if they should hit the market right away, even though they have got the `green signal' from the regulator. While key indices have recouped their losses suffered in January, investors remain wary of realty firms. The poor performance of the recent offerings in the sector is the main reason, while liquidity concerns because of the year-end factor is also keeping IPO-bound companies in check, say market watchers.

"We have received the required clearances from Sebi and are looking forward to coming out with our IPO in the near future," said Abhishek Lodha, MD, Lodha Developers, without specifying a deadline.

Lodha Developers, Ambience, Emaar MGF and Nitesh Estates are the leading companies that are yet to open their books for subscription despite getting the blessings of Sebi. Together, these four companies are looking to mop up around Rs 8,000 crore through their IPOs.

"Primarily, the market sentiment towards realty has not been very encouraging. Hence, a lot of players are waiting," said S Subramanian, head of investment banking, Enam Securities.

Source: Economic Times By Supriya Verma Mishra IPO-Bound Realtors Sitting On Fence Despite Sebi Nod

A company making a quali- fied institutional placement (QIP) will have to provide the stock exchanges with details of its shareholding before and af- ter the sale, Securities and Ex- change Board of India (Sebi) said.

The QIP details will be made available on the website of the stock exchange where the firm is listed.

Sebi's latest move is aimed at allaying concerns on the identities of investors in a QIP and the utilization of money raised through this route.

As the Indian economy re- covered from a slowdown, cash-strapped firms--mostly in construction and real es- tate--turned to QIPs to access funds. Between April and Feb- ruary, 60 QIPs were issued, raising a total of Rs41,552.19 crore for the issuing firms.

Source: Live Mint Necessary Disclosure : Companies Required To Identify QIP Investors

" The project will be implemented in 27 offices of EPFO by the end of this financial year and in the remaining 92 offices by 2010- 11 financial year," minister of state for labour and employment Harish Rawat said.

In a written reply in the Rajya Sabha, he said the project is being implemented in collaboration with the National Informatics Centre ( NIC). The implementation of the project was approved by the Central Board of Trustees of EPFO in its 182nd meeting. Rawat also said the implementation of the project is being reviewed from time to time.

Credit enhancement can be done through issue of capital market instruments such as debentures and bonds.

Credit enhancement will be permitted to be provided by multilateral/regional financial institutions and Government-owned development financial institutions, the RBI said in its notification on External Commercial Borrowing policy for structured obligations.

The underlying debt instrument should have a minimum average maturity of seven years and prepayment and call/put options would not be permissible for such capital market instruments up to an average maturity period of 7 years.

Guarantee fee and other costs in connection with credit enhancement will be restricted to a maximum 2 per cent of the principal amount involved.

Source: Realty Plus RBI allows credit enhancement facility to infra firms

According to a senior MHA official, security agencies had scrutinised some high-value insurance policies, often running into crores and involving a one-time premium, and traced them to suspicious clients.

Even a look at the money trail of terrorist and insurgent outfits, including those active in northeast, revealed parking of huge money in insurance policies. As this translated into huge business for the insurance companies, both in the public and private sector, no questions were asked while issuing the high-value policies.

Keen on preventing subversive elements from misusing lax insurance policy registration norms to invest terror/insurgency funds, MHA is now insisting on all insurance companies following a proper KYC (know-your-customer) drill. This would involve verifying the identity and address of the policy holders and also making it mandatory for PAN no to be quoted in all insurance policies.

Life insurers said they were selling Ulips, which had been approved under Section 2 (11) of the Insurance Act. The law, they said, allowed Ulips to be part of insurance. They said insurance was explicitly excluded from the collective investment scheme of Sebi under the Act. A large life insurer also sought to highlight the difference between a Ulip unit and a share, industry sources told Business Standard.

“The units issued in unit-linked insurance products do not fall within the definition of the term ‘security’ on account of their clear exclusion under the SCRA (Securities Contract Regulation Act) or even under the definition of the term ‘unit’ since these units do not form one undivided share in the assets of a scheme,” the letter said. The Insurance Regulatory and Development Authority (Irda) also quoted SCRA and said Ulips were neither securities not securities-related transactions under the law.

An insurance company said Ulip units were much more than the undivided share in case of a life insurance contract. “They include a death benefit which is linked to the premium paid and in case of unit-linked pension annuity contracts; they are based on traditional policies which do not issue any ‘unit’ under the said policies,” it said.

Sebi’s notices to 13 life insurance companies said the structure of Ulips was similar to that of mutual funds and was in the nature of collective investment schemes, which come under its purview. It had also written to Irda. In response, Irda questioned the market regulator’s notices to insurers on conceptual, legal and structural grounds.

Trail fee is the money that mutual funds pay to distributors, depending on the period for which unitholders stay invested in a scheme.

Registrars and Transfer Agents (RTAs) of asset management companies (AMCs) have not been processing commissions on account of non compliance of KYC norms.

“There has been a delay in payment, both in trail and upfront commission for all those distributors who have done even less than 1% of their total transactions online,” Surajit Mishra, EVP, Bajaj Capital, told ET.

SEBI had in December 2009 clarified that all asset management companies (AMCs) must maintain a copy of full investor documentation, including KYC, power of attorney (PoA) in respect of transactions or requests made through mutual fund distributors.

Currently, the documentation is maintained by the respective distributors. The regulator had told AMC trustees that distributors should not be paid further commission if they don’t comply with this norm.

Source: Economic Times by Deeptha Rajkumar Lack of clarity on KYC rules hits payment to MF sellers

This is to help Indian promoters hit by subdued stock market conditions then, and will allow them to revise prices as per the new pricing norms.

The government had in November 2008 relaxed the minimum pricing norms for conversion of FCCBs to the average of weekly high and low prices for two weeks prior to the relevant date instead of the earlier higher of the average for six months.

With the stock market falling sharply in 2008, the six-month norm had yielded high conversion prices. A finance ministry statement said: “In view of the problems being faced by companies, it has now been decided by the government to provide a window of six months under the scheme to interested companies to revise their conversion price as per new pricing norms.”

The move comes in the backdrop of several representations from companies seeking permission to revise the conversion price of FCCBs issued prior to November 27. The decision to extend this facility was taken in consultation with the RBI and market regulator Sebi.

Source: Economc Times Govt extends flexible pricing norm for conversion of FCCBs

A first step towards withdrawing the post-crisis fiscal stimulus may be taken in the Union Budget for 2010-11, with an increase in the Cenvat rate for excise duty by 2 percentage points. Encouraged by signs of growth revival and desperate to reduce the fiscal deficit Union Finance Minister Pranab Mukherjee is expected to take this step when he presents his Budget to parliament on 26 February.

The government had reduced the Cenvat rate for excise duty from 14 to 8 per cent — in two rounds, by four percentage points in December 2008 and two percentage points in February 2009. The proposal for a partial rollback of these tax cuts has been revived following the advance estimates for gross domestic product (GDP) pegging the growth rate for 2009-10 at 7.2 per cent, up from 6.7 per cent in 2008-09 (quick estimates).

What has also emboldened the government to consider a rollback of the excise duty cut is the healthy growth in sales of consumer durables and automobiles in recent months. In January, for instance, the automobile industry's sales went up by 32 per cent over the same month in 2009, while the consumer durables industry is expecting to grow 15 per cent during 2009-10.

The government has now veered round to the view that a two percentage point increase in excise duty for such industries would be moderate enough to be absorbed by them without unduly affecting their medium-term growth prospects.

Proponents of the partial rollback have argued that such a phase-out would also help the finance ministry effect a calibrated integration of excise duty with the services tax by the end of the next financial year, when the proposal for a goods and services tax is likely to be implemented.

Source: Business-standard Stimulus rollback: 2 percentage point excise hike in budget

Many banks are offering lucrative schemes to card holders in order to pare down their credit card exposure following a sharp increase in bad assets linked to them. Almost all major banks, including ICICI Bank and Citibank, are offering similar schemes but don't want to publicise them, which could increase the risk of more card users defaulting on regular obligations and opting for these easier settlement options.

"There are various structured payment plans that we've been offering. These limited schemes are worked out in consultation with the customer as an alternative repayment plan," said a senior ICICI Bank official, who did not wish to be named. A mail sent to the bank, however, remained unanswered till the time of filing this story. The scheme varies from bank to bank.

 So, if you have an outstanding loan of around Rs 2 lakh and are paying an interest as high as 18%, you can convert this into a regular loan, spread over a period of three years, where your interest rate may be as low as 12%. "We have a retentionoriented, assistance-based collections process, and if there is a genuine inability to pay, we work closely with customers to offer repayment solutions based on his or her cash-flows," said business manager cards, Citibank, Sandeep Bhalla.

Source: Economic Times By Dheeraj Tiwari Breathing Easy: Banks Offer Card Defaulters Easy Loan To Settle Dues

The move comes in the backdrop of the poor response from private companies and banks in financing projects, especially those in sectors like highways and urban transport and infrastructure.

"The objective is to identify infrastructure opportunities from the perspective of a PE firm and then set out to attract investments from them," an official explained. While the finance ministry and the Planning Commission have already begun working on a preliminary set of guidelines for private equity investors, it is also planning to appoint a consultant to finalise the norms.

The fresh guidelines for PE investors, which will be unveiled later this year, will cover all major infrastructure sectors, including electricity, telecommunications, roads and bridges, railways , ports, airports, irrigation, water supply and gas distribution. This would be the first such effort by the government to come out with comprehensive guidelines to attract PE firms.

Source: Economic Times PE-friendly norms soon for investment in core sector

On a cumulative basis, FDI inflows were almost flat at $20.9 billion between April and December of this fiscal compared with $21.1 billion in the corresponding period previous year, Government sources said.

Sector strengths
While the data pertaining to sector-specific break-up for December is not yet out, on a cumulative basis between April-November FY10, the services sector (financial and non-financial services) brought in FDI to the tune of $3.4 billion, and telecom accounted for another $2.2 billion.

For the same period, housing and real estate raked in FDI equity inflows of nearly $2.2 billion, while $1.7 billion of inflows were channelised towards construction activities.

Source: www.thehindubusinessline.com By Moumita Bakshi ChatterjeeFDI inflows up 13% in December at $1.5 b

* Growth streak

"The rules will apply to all sectors, such as information technology (IT), business process outsourcing, IT-enabled services (ITeS), auto, garments, wrist watches and liquor, that involve international transactions between two related companies. We are discussing what should be the ideal safe harbour rate. The problem is that in the IT sector alone, margins vary between 5 per cent and 75 per cent and they change every six months," a CBDT member told Business Standard.

HARBOURING MANY VIEWS

• A CBDT panel has estimated there is variance in margins of companies that would come under the ambit

• Experts argue that a lower rate should not be a problem, as it evens out in the long run

• The industry is of the view that the rate should be based on the average margins of the industry

•  According to consultants, instead of a range, there should be one single rate for safe harbour with the flexibility of minor adjustment of 2.5% on either side

• The government, however, wants to keep the rate higher to avoid any kind of revenue loss

Demands for transfer pricing rose from Rs 3,500 crore in 2007-08 to Rs 10,000 crore in 2009-10. In a safe harbour regime, transfer prices declared by a taxpayer would be accepted by revenue authorities.

Source: Business-standard By Vrishti Beniwal CBDT panel finds hole in transfer pricing tax rate

THE government is considering an across-theboard increase in excise duty in Budget 2010-11, as it faces pressure to withdraw fiscal stimulus measures in the wake of a 16-year-high fiscal deficit at 6.8% of GDP in the current fiscal.
    "
One option being considered is an increase in cenvat rate by 2% while leaving the service tax rate unchanged at 10%," a finance ministry official told ET. Cenvat refers to the median excise duty--tax on manufacture of goods--levied on nearly 90% of the goods made in the country.

More services could be brought into the tax net to allow the government to keep service tax rates unchanged, the official said, requesting anonymity. A hike in service tax rate would be an immediate burden on consumers already battling high food prices.

The proposal is at a very early stage and could undergo significant changes by the time the budget is presented.

An alternative proposal is also under consideration, which moots an increase in excise rates in sectors that are doing well such as automobiles, instead of an across-the-board hike.

The economy is recovering from a downturn induced by last year's global recession, which forced the government to cut taxes and increase spending to boost demand. RBI is keeping policy rates at record low levels to encourage economic activity.

The country's GDP grew 6.7% in 2008-09 after recording 9%-plus growth rates in the three preceding years. Three stimulus packages announced by the government in December 2008, January 2009 and February 2009 put the economy back on track, and helped it grow by 7.9% in the second quarter of the current financial year.

At present, the prescribed solvency margin, which is the excess of assets held by the insurer in the interest of policy holders is 150%. The solvency margin requirement will be much lower than the prescribed norm during an economic downturn. But this would mean that insurers will have to reckon with a higher solvency requirement during a boom. Simply put, they will have to save for a rainy day to tide over tough times when their sales and growth in business dips.

Solvency margin requirements are the equivalent of capital adequacy norms for the banking industry. RBI is already following the practice of having prudential norms that are countercyclical. For instance, in the past, RBI has increased the margin requirement for loans against shares when equity indices touched a new high. The central bank has also varied capital requirements for banks by tinkering with risk weightage on loans. In real estate loans, the central bank had increased the risk weightage when property prices soared in 2008 only to reduce them again when prices crashed in 2009.

IRDA too had reduced capital requirements for life insurance companies in 2008, following the crash in equity markets worldwide. The regulator had reduced capital requirements by almost a fifth in January 2009. For products with a guaranteed return, the capital requirement had been eased by 7%, whereas for products where there is no guarantee, the reduction is 20%. Given the industry's product composition, the overall capital requirement towards solvency margin would be lesser by 18%.

Source: Economic Times Insurers will soon have an easier solvency mandate