1. Foreign banks with presence in India and Indian banks with overseas operations may have to categorise their income from banking services (such as loans, deposits, payment services, among others) into income paid by "residents" and "non-residents". This is one of the suggestions made by a technical group set up by the RBI to "finetune" the data (for statistical purposes) on international trade in banking services for negotiations under General Agreement on Trade in Services (GATS).
2. Pressure is mounting on the Finance Ministry to look into various aspects of the reverse mortgage scheme and take decisions on tax treatment at the hands of both the borrower and the lender under such a scheme. With reverse mortgages taking off in a small way in the Indian market, bankers and prospective users of this product are keen that all taxation issues are addressed upfront by the Ministry as a matter of precaution. Sources said that the Ministry was looking into the taxation aspect and no final view has emerged on the taxation policy on reverse mortgages. The main contentious issue is whether the recurrent monthly payments received by a senior citizen under a reverse mortgage (equitable mortgage) would be characterised as a capital receipt or income for taxation purpose. Also, clarity is needed on whether any element of profit embedded in cases where the loan is substantially more than the cost of acquisition of the property should be brought to tax or not.
3. City Union Bank plans to introduce yet another deposit scheme - `CUB 500', effective June 11. The bank has decided to offer interest at 10.75% for general category and 25 basis points higher for senior citizens, who park their funds under this scheme. Depositors have to invest a minimum of Rs 10,000 under this scheme. The upper limit is Rs 2 crore. The bank is expecting to garner Rs 2,000 crore through this product.
4. Recent private equity investments in non-banking finance sector in India portend further consolidation in this segment, likely to be driven by foreign banks and financial institutions trying to find a way out of restrictive regulations, observers say. While strategic investors pick up stake in companies as a part of growth plans, private equity players tend to invest in companies only to sell their stakes eventually (usually in about seven years). In case of investments in publicly-held companies, the exit could even be earlier. Thus, investments by private equity players could be an indicator of what they expect to happen in that sector.
5. IFCI Ltd has got a tax refund of Rs 3.8 billion. The refund was on account of some extra provisioning from previous years, and "this will add to the profits of this quarter."
6. The new Confederation of Indian Industry (CII) president, Sunil Bharti Mittal, wants US companies to make long-term and "inclusive" investments in India as the country today offers "the perfect combination" for partnership. "Thanks to economic reforms India is growing at a fast pace, understanding of US industry is increasing in India and irritation levels are going down in America."
