New director nominated on RBI board

The Government has nominated Hasmukh Adhia, Secretary, Department of Financial Services, as the Director of Central Board of Directors of the RBI.

“The Central Government has nominated Dr. Hasmukh Adhia, Secretary, Department of Financial Services, Ministry of Finance, New Delhi as a director on the Central Board of Directors of the Reserve Bank of India vice Gurdial Singh Sandhu,” RBI said in a statement.

“Dr. Hasmukh Adhia’s nomination is with effect from November 11, 2014 and until further orders, RBI added.

Adhia is a 1981 batch Gujarat cadre IAS officer, who worked with Prime Minister Narendra Modi, when he was Gujarat Chief Minister.

In a major bureaucratic reshuffle earlier this month, Adhia was appointed the Financial Services Secretary replacing ex-Financial Services Secretary Gurdial Singh Sandhu.

His appointment was the third secretary level change in the Finance Ministry after Former Revenue Secretary Rajiv Takru was shifted to Department of North Eastern Region and Former Finance Secretary Arvind Mayaram was first shifted to Tourism Ministry and later to Minority Affairs Ministry.


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FinMin notifies higher limit for tax savings bank deposits

Following the Budget announcement, the Finance Ministry has notified higher limit under bank term deposit for Income Tax benefit.

Now, for the current fiscal, one can deposit Rs. 1.5 lakh as against Rs. 1 lakh in a bank deposit to get tax benefit under Section 80C of the Income-Tax Act. This means amount deposited up to Rs. 1.5 lakh in a 5-year term deposit will be deducted from income before calculation of personal income tax. The new notification will come into effect from November 13.

In this year's Budget, the Finance Minister Arun Jaitley had announced enhancing tax investment limit under Section 80C to Rs. 1.50 lakh to boost domestic investment in long term savings. “In the year 2012-13, the gross domestic savings were 30.1% of the GDP as compared to 33.7% in the year 2009-10. Increase in savings and their productive use leads to higher economic growth. The households are the main contributors to savings,” he said.

Under Section 80C, one can invest in instruments such as 5 year National Saving Certificate, Public Provident Fund (PPF) , Life Insurance Policies, Equity Linked Saving Scheme, contribution in Employees Provident Fund and besides bank deposits. This limit also includes principal repayment towards home loan. Since, PPF is an independent scheme and have different features, the Government issued a separate notification on August 19 and now there is separate notification for bank term deposit.

The new notification has been issued under Bank Term Deposit Scheme 2006. The deposit can be transferred from one branch of a bank to any other branch of the same bank, but not to other bank. Unlike life insurance policy and NSC, It can also not be pledged to get loan. There is no provision of premature encashment

The deposit holder will have the facility to get interest either in lump sum or every quarter/month. However, interest will be liable to Tax Deducted at Source (TDS). Banks such as State Bank of India has launched tax saving term deposit.



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Rate cut by RBI will give ‘good fillip’ to economy: Jaitley

Pitching for a rate cut by RBI, the Finance Minister Arun Jaitley today said lower cost of capital will give a “good fillip” to the economy.

“I am quite clear in my mind that the cost of capital has to come down. Inflation has moderated, global fuel price has eased. Therefore, if RBI, which is a highly professional organisation, in its wisdom decides to bring down the cost of capital (it) will give a good fillip to the Indian economy,” he said.

Delivering the key mote address at the Citi’s Investor Summit, Jaitley hoped that as a professional organisation the Reserve Bank will take “the best decision”.

RBI Deputy Governor S S Mundra, who was present, later said the central bank revises rate, but not on “popular demand. It changes when there is a clear conviction”.

At a different function, Mundra said that RBI will take into account various economic parameters while deciding on interest rate at its next policy.

The RBI, which has kept the key borrowing rate at 8 per cent since January to check inflation, is scheduled to come out with its next monetary policy on December 2.

Meanwhile, September retail inflation has dropped to a record low of 5.52 per cent in October, while the wholesale inflation eased to five-year low of 1.77 per cent.

Indian economy, which slipped to below 5 per cent growth in two consecutive fiscals, is expected to improve to 5.4 to 5.9 per cent in 2014-15.

Giving details of various economic reform measures in the pipeline, Jaitley specifically talked about the Goods and Service Tax (GST) and Insurance Amendment Bill.

The Minister said that he was expecting that Insurance Amendment Bill will be passed in the forthcoming Winter Session of Parliament.

He said he was in touch with the Parliament Select Committee, currently vetting the insurance Bill, and would to persuade it to give the report at the earliest.

As regards GST, the Finance Minister said that he is in discussions with the various state governments and most of the contentious issues have already been resolved.



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Axis Bank hits overseas debt market with $500 m issue

Top private lender Axis Bank today hit the overseas debt market with a benchmark issue to raise at least $500 million in a 5.5-year money, merchant banking sources said here.

“Axis Bank today launched fixed-rate senior unsecured notes in the dollar-denominated debt market to raise at least $500 million. Depending on the pricing and demand, the bank may raise more than $500 million through these Regulation S notes,” a merchant banker said.

India’s third largest private lender has given a price guidance of 1.95 per cent above the US treasury, the sources said, adding the money will be raised through the Dubai branch of Axis Bank and instruments listed on Singapore Stock Exchange.

The book runners to the issue are Barclays, HSBC, JP Morgan and StanChart.

The bank was not immediately available for comments.

Meanwhile, international rating agency Fitch has assigned ’BBB-(exp)’ rating to the issue.

“Axis Bank’s IDR is driven by its viability rating of ’bbb-’, which denotes its standalone creditworthiness. It reflects the strength of its franchise, satisfactory asset quality, improved capitalisation and growing profitability.

“The bank’s increased focus on retail customers has helped it to diversify loan and funding mix and reduce concentration risk since FY11,” Fitch said.



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Central Bank of India launches 'Cent Aspire'

You can now get the power of liquidity in a fixed deposit scheme.

State-owned Central Bank of India has launched a novel deposit scheme that has a free credit card bundled with it.

Under 'Cent Aspire', any individual can get a free credit card against fixed deposit with the bank for deposit amount of Rs. 20,000 and above, K.K.Taneja, Field General Manager, Central Bank of India, told reporters here on Monday.

"The main idea is to ensure that our customers in semi-urban and rural areas get a credit card product and liquidity in a fixed deposit scheme," Taneja told BusinessLine.

As much as 66 per cent of the branch network of 4,700 branches are located in rural and semi-urban areas, Taneja said.

Cent Aspire will enable the customers in these branches to avail themselves of a credit card, he said.

The maximum credit limit that could be availed through the credit card will be Rs. 4,00,000.

Better features

One of the salient feature of the credit card is that it comes with a personal accident cover of Rs. 1,00,000 (against

death). As much as 80 per cent of the deposit amount could be availed as credit limit.

Also, the interest rate on the amount outstanding beyond the credit period is lower than the prevailing interest rates on card receivables, Taneja said.

Home loan

Central Bank of India on Monday also launched a new housing loan product -- Cent Home Double Plus scheme.

This State owned bank's home loan portfolio had recorded a 40 per cent increase on a year-on-year basis as of end September 2014.

srivats.kr@thehindu.co.in



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