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Building the new private bank

Mumbai: The Aditya Birla Group and Reliance-Anil Dhirubhai Ambani Group would ask the Reserve Bank of India (RBI) permission to open new banks once there is more clarity from the banking regulator.

They are two of many Indian firms that may queue up for banking licences, following finance minister Pranab Mukherjee’s announcement that the central bank is considering giving some additional banking licences to private sector firms and non-banking finance companies (NBFCs).

NBFC stocks rose on the Bombay Stock Exchange. Srei Infrastructure Finance Ltd rose 2.79% to close at Rs64.50; Reliance Capital Ltd jumped 8.12% to close at Rs786.45; Muthoot Capital Services Ltd was up 1.91% to close at Rs80; Infrastructure Development Finance Co. Ltd rose 4.69% to close at Rs159.55 and IFCI Ltd jumped 8.1% to close at Rs51.40.

On the anvil: RBI last granted new licences to banks in 2003. Hemant Mishra/Mint Srei, Reliance Capital, Aditya Birla Financial Services Group and Muthoot are keen to convert themselves into banks.

“This move will potentially open exciting new avenues of growth for Reliance Capital in the future,” said Sam Ghosh, chief executive officer of Anil Ambani-owned Reliance Capital. “We await further details and guidelines.”

“The Aditya Birla Financial Services Group is already a large non-bank player, occupying a significant position across all its verticals,” said Ajay Srinivasan, chief executive, financial services, Aditya Birla Group. “We wholeheartedly welcome this initiative and will definitely apply for a licence.”

But RBI is not in a hurry to issue fresh licences. “We will have to start working on it and ...take into account our experience and what is practical,” deputy governor Usha Thorat said.

“There will be new licences. In the last five years we have not given any new licences. However, while we do this, we will keep in view the basic principles which are already there, mainly diversified shareholding and fit and proper guidelines,” she added. “The basic principles of ownership and governance will remain unchanged, because that has stood the test of time.”

RBI had last granted licences to two banks in 2003.

The existing ownership guidelines restricts the ownership of large industrial houses in banks to 10%. The guidelines on conversion of NBFCs into banks also do not permit NBFCs promoted by a large industrial house or owned and controlled by public authorities, including local, state or Union governments, from converting into banks.

Reliance Capital’s Ghosh said the firm is still waiting to hear from RBI on how it intends to deal with issues such as shareholding patterns or whether NBFCs will get to retain existing holding structure. “Basically, how will these licences be given out and who will get it,” he said.

In his annual general meeting speech in July last year, Anil Ambani had reiterated that his group wanted to own a bank as soon as the country’s regulations allowed private entities to do so.

Tata Capital Ltd, a subsidiary of Tata Sons Ltd, said it would await a firm policy announcement before commenting on the issue.

Thomas George Muthoot, director, Muthoot Pappachan Group, said: “We will be able to decide on our action plans only after receiving the complete details.”

Hemant Kanoria, chairman and managing director Srei Infrastructure Finance, said: “We had been proposing this to the government for quite some time because we sincerely feel this is an idea whose time has certainly come. However, we await the details.”

However, things will not change overnight.

“The implementation of this announcement will depend on RBI,” said Shefali Goradia, partner, BMR and Associates, a consultancy. “The central bank has been very conservative in its dealing with non-banking finance companies. Even if it issues new guidelines, they would be laced with many conditions.”

Source: http://www.livemint.com/2010/02/26221102/Building-the-new-private-bank.html

FM revises tax slabs to give more money to consumers

NEW DELHI: The 2010-11 general budget today provided considerable relief to income tax payers by raising the slabs at two levels but hiked the central excise duty on non-petroleum products across the board from 8 to 10 per cent and the basic duty on crude and petroleum products besides effecting a one-rupee increase per litre on petrol and diesel.

The basic threshold limit for income tax exemption will remain at Rs 1.60 lakh. Under the new proposal, 10 per cent tax will be levied between Rs 1,60,001 and Rs 5,00,000, 20 per cent on incomes between Rs 5,00,001 and Rs 8,00,000 and 30 per cent above Rs 8,00,000.

The present income tax slabs and rates are 10 per cent for income between Rs 1,60,001 and Rs 3,00,000, 20 per cent for income between Rs 3,00,001 and Rs 5,00,000 and 30 per cent for income above Rs 5,00,001.

Proportionately, similar changes have been made in the taxes related to women and senior citizens aged above 65 years.

Mukherjee also gave another relief to individual tax payers by raising the existing limit of Rs 1,00,000 on tax savings by an additional amount of Rs 20,000 for investments in long-term infrastructure bonds.

Contributions to Central Government Health Scheme (CGHS) have also been allowed as deductions within the overall ceiling for tax rebate besides contributions to health insurance schemes which are currently allowed as deductions under the Income Tax Act.

The entire opposition walked out of the Lok Sabha during the presentation of budget by finance minister Pranab Mukherjee, dubbing it "highly inflationary" as he partially rolled back the stimulus by hiking the ad velorum component of excise duty on large cars and multi-utility vehicles by two per cent to 22 per cent.

The budget also raised the specific rates of duty on portland cement and cement clinker. The basic duty of 5 per cent on crude petroleum, 7.5 per cent on diesel and petrol and 10 per cent on other refined products is being enhanced.

The central excise duty on petrol and diesel is being enhanced by Re one per litre.

The proposals relating to customs and central excise are estimated to result in a net revenue gain of Rs 43,500 crore for the year. The proposals for service tax, in which government plans to bring in some more services, will result in a net revenue gain of Rs 3000 crore for the year.

While direct tax proposals are expected to result in a loss of Rs 26,000 crore for the year, those relating to indirect tax are estimated to result in a net revenue gain of Rs 46,500 crore.

Taking into account the concessions and measures to mobilise additional resources, the overall revenue gain is estimated to be Rs 20,500 crore for the year.

The budget also proposed a hike in defence expenditure from Rs 1,41,703 crore to Rs 1,47,344 crore, including Rs 60,000 for capital expenditure.

In the Budget Estimates for 2010-11, gross tax receipts are estimated at Rs 7,46,651 crore while the non-tax revenue receipts are estimated at Rs 1,48,118 crore.

Total expenditure is placed at Rs 11,08,749 crore, which is an increase of 8.6 per cent over the total expenditure in Budget Estimates of 2009-10. The plan and non-plan expenditures in Budget Estimates in 2010-11 are estimated at Rs 3,73,092 crore and Rs 7,35,657 crore respectively.

The fiscal deficit for 2010-11 has been pegged at 5.5 per cent and the rolling targets for 2011-12 and 2012-13 have been pegged at 4.8 per cent and 4.1 per cent respectively.

The fiscal deficit of 5.5 per cent of GDP in 2010-11 works out to Rs 3,81,408 crore. Taking into account various other financing items for fiscal deficit, the actual net borrowing of the government in 2010-11 would be of the order of Rs 3,45,010 crore.

In direct taxes, the Finance Minister proposed to reduce the current surcharge of 10 per cent on domestic companies to 7.5 per cent but at the same time raised the rate of Minimum Alternate Tax (MAT) from 15 per cent to 18 per cent of book profits.

In indirect taxes, Mukherjee made structural changes in the excise duty on cigarettes, cigars and cigarillos, coupled with some increase in rates. He also proposed to enhance excise duty on all non-smoking tobacco such as scented tobacco, snuff and chewing tobacco.

In addition, he proposed to introduce a compounded levy scheme for chewing tobacco and branded unmanufactured tobacco based on the capacity of pouch-making machines.

Attempting to pay focused attention to agriculture and related sectors, the Finance Minister proposed to provide project import status with a concessional import duty of 5 per cent for setting up mechanised handling systems and pallet-racking systems in mandis and warehouses for foodgrain and sugar as well as full exemption from service tax for installation and commissioning of such equipment.

A similar status on customs duty with full exemption from service tax will also be extended to initial setting up and expansion of cold storage, cold room and processing units for such produce.

Extending his goodies in excise duties in certain sectors, he gave full exemption to toy balloons and reduction in basic customs duty on long pepper, asafoetida and excise duty on goods covered under Medicinal and Toilet Preparations Act.

The Service Tax net is being expanded to include domestic and international air journeys of all classes, health check-up undertaken by hospitals for employees of business entities and health services provided under health insurance schemes offered by insurance companies.

Source: http://timesofindia.indiatimes.com/union-budget-2010/FM-revises-tax-slabs-to-give-more-money-to-consumers/articleshow/5618460.cms

3 Google executives convicted of privacy violations

Milan: Three Google executives were convicted of privacy violations Wednesday in allowing a video of an autistic boy being abused to be posted online — a case that has been closely watched for its implications on Internet freedom.

Judge Oscar Magi sentenced the three to a six-month suspended sentence and absolved them of defamation charges. A fourth defendant was acquitted altogether.

The trial had been closely watched since it could help define whether the Internet in Italy is an open, self-regulating platform or if content must be better monitored for abusive material.

Google, based in Mountain View, California, had said it considered the trial a threat to Internet freedom because it could force providers to attempt an impossible task — prescreening the thousands of hours of footage uploaded every day onto sites like YouTube.

Prosecutors insisted the case wasn’t about censorship but about balancing freedom of expression with the rights of an individual.

The charges were sought by Vivi Down, an advocacy group for people with Down syndrome. The group alerted prosecutors to the 2006 video showing an autistic student in Turin being beaten and insulted by bullies at school. In the footage, the youth is being mistreated while one of the teenagers puts in a mock telephone call to Vivi Down.

Google Italy, which is based in Milan, eventually took down the video, though the two sides disagree on how fast the company reacted to complaints. Thanks to the footage and Google’s cooperation, the four bullies were identified and sentenced by a juvenile court to community service.

The events shortly preceded Google’s 2006 acquisition of YouTube.

All four executives denied wrongdoing. None was in any way involved with the production of the video or uploading it onto the viewing platform, but prosecutors argued that it shot to the top of a most-viewed list and should have been noticed.

Convicted of privacy violations were Google’s senior vice president and chief legal officer David Drummond, former chief financial officer George Reyes and global privacy counsel Peter Fleischer. Senior product marketing manager Arvind Desikan was acquitted.

Source: http://www.livemint.com/2010/02/24144027/3-Google-executives-convicted.html

Railway Budget 2010: Highlights

The main highlights of the 2010-11 railway budget include:

-- No increase in passenger fares
-- Rs.100 reduction in freight per wagon for fertilisers and kerosene
-- Free travel for cancer patients in 3rd AC classes
-- Cost-sharing in public-private-partnership (PPP) mode in some gauge-conversion projects
-- Further extension of Kolkata Metro on priority basis; stations to be named after Bahadur Shah Zafar, Tagore family
-- Karmabhoomi trains to be introduced for migrant labour
-- New Janmabhoomi train between Ahmedabad and Udhampur
-- Special "Bharat Teertha" train to be run around India to commemorate Rabindranath Tagore's 150th birth anniversary
-- Railway line to be extended from Bilaspur in Himachal Pradesh to Leh in Jammu and Kashmir
-- Andaman and Nicobar Islands to get railway line from Port Blair to Diglipur
-- Sikkim capital Gangtok to be connected by rail from Rangpo
-- 2011 being 150th anniversary of Rabindranath Tagore, special train to be run from West Bengal to Bangladesh
-- Gross earnings in 2009-10 estimated at Rs.88,281 crore
-- Working expenditure in 2009-10 estimated at Rs.83,440 crore
-- Expenses during 2010-11 estimated at Rs.87,100 crore
-- Thrust on expansion in 2010-11 with allocation of Rs.4,411 crore
-- Kashmir rail link to be extended to Sopore in the north of the valley
-- Net profit of Rs.1,328 crore in 2009-10
-- 10 automobile ancillary hubs to be created
-- Twenty-two million energy saving CFLs for lighting distributed already
-- Policy decision to employ one member of family whose land is requisitioned for railway projects
-- North-south, east-west dedicated freight corridors to be created
-- Construction of high-speed passenger rail corridors envisaged
-- More multi-functional hospitals to be set up
-- Educational facilities to be set up for children of 80,000 women families
-- Special facilities to be established for gangmen
-- Insurance facilities for licensed porters as part of railway's corporate social responsibility
-- Centre for railway research to be established with Indian Institutes of Technology and Defence Research and Development Organisation
-- Will involve unions in policy making
-- Integral Coach Factory Chennai to be further modernised
-- New wagon repair shop in Mumbai
-- Design, development and testing centre for railway wheels at Bangalore
-- Within five years, all unmanned level crossings to be manned
-- Construction of more underpasses, besides road overbridges
-- Greater coordination with state governments to protect railway property
-- Security of women passengers to be improved
-- Ex-servicemen to be employed in Railway Protection Force
-- Five sports academies to be set up
-- Astroturf to be provided for development of hockey
-- Employment opportunities for sports persons
-- Railways to be lead partner for Commonwealth Games
-- Special drive to increase passenger amenities
-- Upgrade of 94 stations
-- Six new drinking water bottling plants in PPP mode
-- Modern toilets at railway stations
-- More ticketing centres to help the public
-- Acquisition of cutting edge safety technology
-- 1,000 route km to be created
-- Special task force for clearing investment proposals in 100 days
-- New business model to be created
-- No privatisation of railways
-- But greater participation of private sector
-- 117 of 120 new trains for current fiscal to be flagged of

Source: http://timesofindia.indiatimes.com/articleshow/5610832.cms