Govt to infuse Rs 909.9 cr in Andhra Bank, Allahabad Bank

MUMBAI: The government will infuse Rs 909.9 crore as equity capital into two PSU lenders -- Andhra Bank and Allahabad Bank -- as part of recapitalisation package to shore up equity capital.

"The bank is convening an Extraordinary General Meeting of shareholders on March 23, 2011, seeking their approval for issuance of 3.9 crore equity shares at Rs 157.28 per share (face value of Rs 10 each) aggregating to Rs 618 crore to government of India on preferential basis," Andhra Bank informed the Bombay Stock Exchange .

Besides, the Kolkata-based Allahabad Bank is expected to get Rs 291.99 crore by the way of preferential share.

With the capital infusion, the stake of Government of India in Allahabad Bank would go up to 56.48 per cent from existing 55.23 per cent.

The capital infusion has to take place before March this year.

Earlier in the day, Finance Minister Pranab Mukherjee announced capital infusion of Rs 6,000 in the next fiscal to shore up capital.

Source: EconomicTimes

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FM may raise tax exemption cap to Rs. 2 L

Tax experts are hopeful Finance Minister Pranab Mukherjee will increase the income tax exemption limit to Rs. 2 lakh per annum from Rs. 1.6 lakh to bring the rates in line with the Direct Taxes Code (DTC).

"To align the exemption limits under personal income tax with DTC, the Centre is likely to raise the IT exemption limit to 2 lakh," Balbir Singh Mastan, Partner, DSK Legal said.

High inflation, particularly in the food items, also makes a strong case for raising the tax exemption limit, experts argue.

"Taking into account rising inflation, the Government could raise personal I-T exemption limit," tax consultant Subhash Lakhotia said.

He further said that in the wake of the issues related to increasing blackmoney, the government should limit tax rates to upto 20 per cent for individuals and 25 per cent for corporates.

Tax gurus also said the limit for exemption through saving schemes like investments in provident fund and infrastructure bonds, may also be raised from the current Rs. 1.2 lakh.

"The Finance Minister is expected to raise the deduction under 80 C of IT (tax saving) to Rs. 1.5 lakh," Tax consultant Rakesh Gupta said.

In the budget of 2010-11, deduction of an additional amount of Rs. 20,000 was allowed, over and above Rs. one lakh on tax savings, for investment in long-term infrastructure bonds.

Aseem Chawla, Partner in Amarchand & Mangaldas, however, does not expect that Mukherjee would make any changes in rates of Corporate Tax and Minimum Alternate Tax (MAT) but feels excise duty could be raised.

"The Corporate Tax and MAT will remain unchanged. The excise duty will be raised by 2 per cent," Chawla said.

The government is also likely to announce relief in the housing loan segment. They also expect Mukherjee to bring healthcare segment into service tax net.

Meanwhile, economists are expecting the government to further liberalise the foreign direct investment (FDI) regime to contain the dip in FDI inflows.

"Budget may contain steps to improve the FDI situation in the country, by introducing some procedural simplifications as well as opening up the FDI for more sectors," said Crisil's chief economist D K Joshi.

Source: Financial Express

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Indian Bank offers 9.5% on 555 days fixed deposit

State-owned Indian Bank has said it has revised its rates, with 555 days fixed deposit attracting 9.5 per cent.

While 111 days term deposit offers savers 9.1 per cent, 222 days fixed deposit gives interest rate of 9.2 per cent per annum, Indian Bank said.

Similarly, interest rate on 333 days special fixed deposit scheme has been pegged at 9.3 per cent and 9.4 per cent for 444 days term deposit.

Senior citizen earn 0.75 per cent higher rates over these rates, the Chennai-based bank said.

Meanwhile, the bank also revised its lending rates both base rate and Benchmark Prime Lending Rate (BPLR) earlier this month.

Source: Financial Express

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Plastic notes only after satisfying ecological concerns: RBI

The Reserve Bank's ambitious plastic currency note programme runs the risk of falling victim to ecological issues and the roll-out will depend on a study of the project's impact on the environment.

The RBI is in the process of starting a pilot project for issue of plastic currency notes, wherein plastic notes of Rs. 10 denomination would be distributed through the central bank's five regional offices.

The proposed shift to plastic currency notes, instead of the normal paper notes, is primarily aimed at checking the high cost associated with printing of paper currency, as they need early replacement due to soiling and mutilation.

Besides studying the potential cost savings through plastic notes, the pilot project will also look into the environmental impact of the proposed plastic notes.

In an address at a convocation last week at Sambalpur University in Orissa, RBI Governor D Subbarao also said the central bank would need to study the "carbon footprint" of recycling and disposal of plastic notes.

"During the pilot phase, we need to study not only the relative costs, but also the carbon footprint associated with the recycling and disposal of plastic notes vis-a-vis paper notes," he added.

Subbarao said the RBI would "mainstream the use of plastic currency" only after the success of the pilot project.

A detailed mention of environment aspects was also mentioned for the first time in this year's Economic Survey.

At a time when the government is trying to balance the twin challenges posed by climate change and achieving economic growth, the Survey called for steps to ensure that green growth strategies do not result in slow growth.

Terming cost and longevity as important for currency management, Subbarao said that India was the second largest producer and consumer of currency in the world after China.

He said that producing such a large amount of currency was expensive and one option to cut the costs was replacement of paper currency with plastic notes.

Some of the countries to have moved to plastic currency notes include Singapore and Australia.

In April, 2010, the RBI floated a tender seeking supply of one billion plastic notes of Rs. 10 denomination.

Later in August, the central bank said in its annual report for 2009-10 that it was exploring methods to increase the life of currency notes, especially those of lower denomination, which have a much shorter life.

"The Reserve Bank, in consultation with the government, has initiated steps to conduct a field trial of plastic notes in the denomination of Rs. 10 in the year 2010-11 to gather valuable lessons," the report added.

Source: Financial Express

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Top seven cos lose Rs. 38K cr in m-cap

The combined market capitalisation of seven of the country's top 10 companies declined by Rs. 38,767.51 crore last week, with banking giant State Bank of India emerging as the biggest loser.

SBI shed Rs. 10,883.72 crore from its market valuation, which stood at Rs. 1,64,075.07 crore as on Friday last week. During the week, shares of SBI on the Bombay Stock Exchange fell by 6.22 per cent to Rs. 2,583.90 on Friday.

Two state-run firms mining entity Coal India (CIL) and power producer NTPC together lost Rs. 12,764.46 crore from their combined valuations. The m-cap of CIL stood at Rs. 1,84,374.55 crore while that of NTPC was at Rs. 1,40,543.87 crore on Friday last week.

Oil & gas explorer ONCG too witnessed an erosion of Rs. 4,534.4 crore from its m-cap which stood at Rs. 2,24,966.35 crore. IT bellwether Infosys Technologies' market worth also declined by Rs. 5,060.87 crore to Rs. 1,72,709.65 crore.

The m-cap of telecom giant Bharti Airtel fell by Rs. 1,120.27 crore to Rs. 1,25,014.36 crore.

ICICI Bank's m-cap diminished by Rs. 4,403.79 crore to Rs. 1,13,425.96 crore.

However, country's most valued firm Reliance Industries (RIL) along with IT major TCS and FMCG honcho ITC were on the gainers side. RIL added Rs. 9,360.92 crore to its market valuation which stood at Rs. 3,16,160.26 crore on Friday last week.

The market cap of TCS swelled by Rs. 4,070.97 crore to Rs. 2,17,484.06 crore, while ITC saw an addition of Rs. 506.86 crore to its m-cap which stood at Rs. 1,20,574.35 crore.

The stock markets declined nearly 3 per cent during the week under review, following concerns over the rising global crude oil prices due to political tensions in the Middle East that might stoke up domestic inflation.

Source: Financial Express

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