Private banks to levy up to Rs 150 for cash transactions

Top-three-Private-sector-banks-in-IndiaMajor private banks have begun reintroducing transaction charges for cash deposits and withdrawals at their branches in a move that is being seen as one aimed at discouraging cash transactions and furthering the Prime Minister Narendra Modi and his government’s digital payments drive.

Banks including HDFC Bank   , ICICI Bank   and Axis Bank    on Wednesday began charging a minimum amount of Rs 150 per transaction for cash deposits and withdrawals beyond four free transactions in a month.

ATM intercharge charges have also been re-introduced.

The charges would apply to savings as well as salary accounts effective from Wednesday, leading private sector player HDFC Bank said in a circular.

The bank would also cap the third party cash transactions at Rs 25,000 per day, while cash handling charges would be withdrawn effective on Wednesday, the circular added.

The move was seen in some quarters as aimed at discouraging cash transactions and furthering the digital payment drive.

In his Budget speech last month, Finance Minister Arun Jaitley had imposed a cap on cash transactions above Rs 3 lakh, taking forward the agenda to move towards a cashless economy.

For the basic no-frills accounts, maximum four cash withdrawals would continue to remain free and there would be no fees for cash deposits.

In case of ICICI Bank, the charges are same as they were before the demonetisation move announced on November 8, while there is an increase in such fees in case of some others.

According to details on ICICI Bank website, there will be no charge for first four transactions a month in home branch while Rs 5 per thousand rupees would be charged thereafter subject to a minimum of Rs 150 in the same month.

The third party limit would be Rs 50,000 per day.

For non-home branches, ICICI Bank would not charge anything for first cash withdrawal of a calendar month and Rs 5 per thousand rupees thereafter subject to a minimum of Rs 150.

For anywhere cash deposit, ICICI Bank would charge Rs 5 per thousand rupees (subject to a minimum of 150) at branches, while deposit at Cash Acceptance Machine would be free of charge for first cash deposit of a calendar month and Rs 5 per thousand thereafter.

At Axis Bank, the first five transactions or Rs 10 lakhs of cash deposits or withdrawals would be free and charged at Rs 5 per thousand rupees or Rs 150, whichever is higher.

It could not be ascertained whether the public sector banks have also begun imposing such charges.

When contacted, a senior official said there has been no directive from the government to the banks regarding levy of such charges.

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Indian Economy achieved robust growth rate despite volatility and uncertainty in global economy: FM

arun-jaitleyThe Union Finance Minister Arun Jaitley said that in the First Half of the Current Financial Year 2016-17, the Indian Economy has achieved robust growth rate despite volatility and uncertainty in global economy.

He said that this was made possible by a slew of policy measures undertaken by the present Government including enhanced public investment, kick starting stalled projects, improving the status of financial inclusion significantly among others.

The Finance Minister Jaitley was making the Opening Remarks during his Fourth Pre-Budget Consultative Meeting with the representatives of Indian Trade and Industry Associations/Groups here today.

The Union Finance Minister Arun Jaitley asked the representatives of Business and Trade Sector to increase the private sector spending especially in infrastructure sector. He said that the Government has taken many steps to improve governance by bringing in transparency and efficiency through systematic changes. Jaitley said that the present Government has given greater thrust on fiscal federalism and improving business environment through reforms in policies and regulation among others. Jaitley said that strong macro and micro economic indicators including fiscal fundamentals and follow of fiscal discipline present sound prospects for the Indian economy in future as well.

Various suggestions were received during the aforesaid Consultative Meeting. Major recommendations were as under:

  • Reduction in Corporate Tax and withdrawal of tax incentives which will result in higher collections due to better compliance and will make India an attractive investment destination.
  • Complete elimination or a major reduction in Minimum Alternate Tax (MAT) and higher public investment in infrastructure and social sector.
  • Higher investment in irrigation and rural infrastructure sector as this will increase the spending capacity of the rural people which in turn will create demand for various items and increased economic activity.
  • Increased focus on skill development by focusing more resources on training of trainers’ Programmes.
  • Tax concession to both individual tax payer and Corporate Sector. Minimum exemption limit in case of Personal Income Tax be raised to Rs.5 lakh. After demonetization, since banks will have lot of funds, therefore, interest rate be reduced for manufacturing and other sectors especially for micro, small and medium enterprises.
  • States should levy heavy taxes on industry especially manufacturing sector mainly in higher energy/power charges which make them uncompetitive.
  • Make instrument of cheque more stronger especially after demonetisation by blocking the amount of cheque in the drawer’s account and making amendments in Sec 138 of Negotiable Instruments Act for heavy penalty in case of bouncing of cheques.
  • Measures be taken to revive private sector investment especially in infrastructure sector. Suggestion was made to give infrastructure status to Broadcasting Sector.
  • To give more incentives to promote women entrepreneurs.

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Fall in land prices due to Demonstration Will Give Push To Luxury Market

demonetisation The luxury market in India is likely to touch $ 18.5 billion in 2016 as against $ 14.7 bn last year and will clock a compounded annual growth rate (CAGR) of 25%, chief executive officer (CEO) of NITI Aayog (National Institution for Transforming India), Amitabh Kantsaid at an ASSOCHAM event held in New Delhi.

“The introduction of GST (goods and services tax) will also provide India a huge competitive advantage to India’s luxury sector,” said Kant while inaugurating an ASSOCHAM Luxury Summit.

“My personal view is that sheer social demographics, growth of the economy, rise of the very young population all this will fuel growth and enable growth of a huge luxury market in India,” he said.

“We are just at the beginning of the curve and I think this market will grow and blossom in the next two-three decades,” added Kant.

Terming India which is growing at the rate of 7.6% per annum as ‘an oasis of growth in the midst of a very-very barren economic landscape across the world,’ he said, “The challenge for India is really to grow at very high rates of 9-10% per annum for three decades or more, that is the ambition, that is the hunger which India has.”

“We have grown at those rates for a relatively short period of 5-6 years, but we need to do this on a sustained basis for a three decade period,” further said Kant.

He said that India’s luxury sector is dogged by various challenges like extremely high rents in tier I cities which has led to very diminishing space.

“For the luxury market to grow, we need to provide space at extremely low cost and I think that fortunately my view is that, with demonetisation land prices will fall over a period of time and that will give a further push to the growth of luxury market,” said Kant.

Talking about the need for infrastructure, he said, “We need to create many more good malls to enable good quality infrastructure to come across India.”

He said that while the luxury market in India together with high net-worth individuals and spend on lifestyle products will keep growing but one of the key challenges for India is that it has not been able to create its own luxury brands.

“France, Italy they have all made their own remarkable brands and it is important that India creates its own great brands in the luxury market over the years because brands give real values over a period of time,” said the NITI Aayog CEO.

“I think the second key challenge if you want the luxury market to grow and expand is very important that we keep expanding the circle of growth and move from tier I to tier II and tier III cities,” he added.

Kant quoted the examples of ‘success stories’ of what automobile giants BMW and Mercedes have done and how they adapted to the Indian market by penetrating in to the tier II and tier III markets.

“Mercedes’ biggest sale is in Aurangabad, BMW’s biggest sale is in tier II and tier III cities, they have adapted and modified themselves to Indian markets and therefore done extremely well and that’s what luxury brands have to do,” he said.

He emphasised upon the need to promote love and passion for luxury brands in India. “Luxury market is essentially driven by good brands and therefore, in the long run, while high net-worth individuals will grow, a lot of wealth will get created in India, I think you need to look at this market from not a prospective of two-three years but a long term perspective of two decades market.”

He also said that it is necessary to enable many of the unique designers, craftsmen to grow within India. “India also has a very large pool of skilled craftsmen, we are very skilled in producing hand-made luxury products, India has been inspiring the luxury and fashion industry for years and has been a source of inspiration for the rest of the world.”

Kant said that India is currently passing through a window of demographic transition which rarely happens. “72% of our population is below the age of 32 and rarely has this happened in the history of the world when you have a very young population, when you pass through this window of demographic transition that the luxury market does not grow.”

He also said that India is passing through exactly the same transitions which happened during the period of 1946-64 in Europe and America and the people who were born during that period are all now retiring across the world.

“This to my mind is the most important economic and social trend that is taking place across the world, the population in Europe and America is getting older, they all are retiring while the population in India is getting younger and will keep getting young till 2040 and therefore the luxury market will keep going up,” said Kant.

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Gave Corrupt No Time To Prepare, Says PM, Pitches For Digital Eco

Narendra ModiPrime Minister Narendra Modi reiterated his pitch for a digital and cashless economy on Friday and said those criticising the government’s preparedness on demonetization were angry as his government gave them “no time to prepare”.

“Everyone has the right to use their money, but the world is changing today. Money is not available physically. We must move towards a cashless economy,” the PM said at a book launch function in Parliament House Annexe in the run-up to Constitution Day on Saturday.

In an apparent dig at opposition leaders who have joined forces against the move, Modi said those criticising the government’s implementation were blindsided as “we didn’t them time to prepare”.

“Those criticising the move don’t have a problem with the government’s preparedness. They have a problem that they didn’t get time to prepare,” the PM said.

Invoking BR Ambedkar on the eve of Constitution Day, the PM said both were inseparable. “Our Constitution has a very special place in our lives. It is important to be connected with the spirit of the Constitution, apart from being aware of its articles and provisions,” he said.

“January 26 is incomplete without November 26,” the PM said.

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Demonetization: Dabur cuts ad spends by half in Nov, sees normalcy next year

DaburIn a bid to overcome the impact of demonetization, Dabur India   has cut their ad spends by 50 percent in the month of November, said CEO Sunil Duggal in an interview to CNBC-TV18.

Talking about the impact of the cash cleanup drive taken up by the government he said the impact on destocking has been severe. Primary sales, too, have dropped by 30 percent up until now.

To ease the impact of demonetization, the company may offer credit to clients but not take too much exposure to risk. According to him, around two-thirds of downstream transactions take place in cash.

However, some sort of normalcy is expected to come back in December with some stimulus coming in from government to stimulus consumption.

Although the company has cut down ad spends by around 50 percent in November, promotion intensity would continue as normal.

With regards to volumes, he said there would be no growth in the third quarter but the fourth quarter would see some improvement.

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Demonetization: Demand may Slowdown But not Evaporate, Says PC Jeweller

pc-jewellersIn the wake of demonetization of Rs 500 and Rs 1000 notes by the government earlier this month, the impact on jewellery sector has been adverse.

However, Sanjeev Bhatia, CFO, PC Jeweller   is not so worried and expects things to settle down with the upcoming wedding season. With the company largely catering to wedding jewellery, which is almost a compulsory purchase, Bhatia said the demand could get postponed but would not evaporate.

He is confident of things normalizing sooner than later. He told CNBC-TV18 that with the main season starting post Sankrant, the second half for the company would be on expected lines. In the first half company reported a 30 percent growth in topline.

It would be difficult to quantify the impact on their Q3 numbers as of now, said Bhatia. Post the demonetization news, some of their stores saw sales while others did not, he added.

He said according to their past experience, with any kind of destruction the purchases are either advanced or postponed. So, even though sales have slowed down, people have come out with other alternative arrangements like RTGS, cheques etc.

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RBI has not allowed NBFC MFIs to collect old notes of Rs 500 and Rs 1000

“Today RBI has come out with a circular granting relaxation to various entities regulated by RBI based upon the representations made by MFIN and other entities. We thank the RBI for the circular on loan classification which has been issued today for all banks and NBFC MFIs. The circular needs to be understood in the light in which it has been issued. There seems to be a common perception that this allows deferment of loan repayment. What this seeks to address is that in the wake of demonetization:
  • If an end client needs extra time to make arrangements for the new notes for repayment of the loan then the lending institution may give that time instead of classifying the loan as delinquent and report this as such to the credit bureau. The client’s credit history then does not get affected.
  • Similarly for any loan given by a bank to an NBFC MFI due to the demonetization process if the repayments are delayed then the borrower may be given more time but not exceeding a maximum of 60 days till December 31, 2016 and the borrower will not be classified as delinquent. It may be clarified that normal interest as per the original loan agreement, will apply to all delayed payments and hence this should be used only in genuine cases of difficulty.
  • It is further reiterated that the RBI has not allowed NBFC MFIs to collect old notes of Rs 500 and Rs 1000. It has also not announced a moratorium on repayments. Customers are expected to pay as soon as possible with the existing & new notes which are legal tender to avoid/minimise any additional interest levies on unnecessarily delayed payments.”
    The author Ratna Vishwanathan is CEO of MFIN

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Govt should go for a sharp fuel rate cut of Rs 5: Enam

petrol-price-cutDemonetization will be positive for medium to long-term. However, in the short term the impact can be seen on daily-wage worker who probably are now in danger of going below the poverty line, says Sridhar Sivaram, investment director at Enam Holdings.

He says the near-term looks patchy as the cash cleanup is an event which market veterans have never seen before and it is difficult to analyse. There will be demand destruction as some buying was coming from the black economy.

He said the government will gain from this currency ban and make Rs 2-3 lakh crore.

He further said the government should not worry about the fiscal deficit for this year and should focus on reviving the economy faster.

He further said the government should not worry about the fiscal deficit for this year and should focus on reviving the economy faster.

On building a portfolio, Sivaram said the concern in this market is that the earnings expectation is too high.

“Pre-demonetisation, the current fiscal year expectation was 15 percent in earnings and 18 percent on top of that for next year. We were expecting 7-8 percent growth for this year and possibly 10-12 percent for next year. The best way to build a portfolio was bottom-up. That was our startegy and we still keep that,” said Sivaram.

He remains positive on PSU banks post the currency ban.

The bitter boardroom battle between Ratan Tata and Cyrus Mistry is confusing the investors whether to invest in Tata companies or not.

Sivaram says that most investors will take a judgement call related to Tata Group.

Below is the verbatim transcript of Sridhar Sivaram’s interview to Latha Venkatesh, Anuj Singhal & Sonia Shenoy. Latha: How do you handle this demonetisation as a stock market investor? Steer clear of buying or selling at this juncture?

A: This is an event which so many of us who have been in the market for so many years haven’t seen anything like this and this year in particular we have had many of these events starting from Brexit to unexpected victory of Trump and now this. So, there is no precedent to this and it is everybody’s own guess on how you analyse this. So, it is reasonably clear that on a medium to long-term this is very positive because the black money in the system will go down if not completely get eradicated. Tax to gross domestic product (GDP) over a period will go up because we are really talking about stock not the flow because the cash will come back into the system, everybody will do the business the way they were doing. It will take some time for them to generate the black money but in general the disclosure levels will surely go up. So, these are the positives from the medium-term.

The negatives in the short-term is we don’t know what is happening because businesses have stopped and my concern is not on the immediate business stopping but the second derivative impact. Like if paints are not selling, the guy who is actually painting, he doesn’t have the daily wage. So, he is going from the brink of poverty to below poverty. So, those are the issues, it is very difficult for anybody to fathom and to analyse and take a calculated guess on how this will play out. I just gave one example. There are hundreds like this, truck drivers, or an auto rickshaw driver, it can just go on.

The only thing is that as we speak things have improved a lot. Over the last 2-3 days I have gone into the market, things have really improved; people are giving Rs 100 notes back. So, this is city. I don’t know how it is in the rural and in the small town. So, I really can’t extrapolate this. So, that is the short-term pain but surely over the medium to long-term this will have significant impact and of course there is a lot written about the gain that the government will make, how much it will be, whether Reserve Bank of India (RBI) can pass it or not time will tell but surely 2-3 trillion is what is expected the government can make and that can be utilised over a period of time.

Anuj: But in the near term there are some people calling for doomsday scenario, some calling for de-growth as well in the economy. Do you see risk of that and if that is the case do you see more pain in the near term for the market?

A: It is possible. It is very difficult to predict with the very near term because we are hearing numbers that sales have fallen by 50 percent; sales have fallen by 60 percent. The question is how fast this does — it is just two weeks now since demonetisation and we are seeing some improvement — he question is how fast this stabilises and we assume that one quarter is a write off and maybe even the next quarter is more or less a write off. The question is can we come back to even 70 percent of previous starting next year and then we move forward. There will be some demand destruction because some of the demand was coming due to the black economy. So, it will take time for it to come back into the system. So, even next year is going to be tough. So, if structurally we think about it this is positive. Yes, near term it is very patchy, really very difficult to analyse.

Sonia: From market’s point of view what impact do you think this could have on the fiscal because higher disclosure should lead to increase tax collection. But on the other hand if the economy slows down markedly then that could hamper tax growth. So, do you think it would become tough for the government to meet that FY17 fiscal deficit target?

A: My view is slightly counterintuitive. I think the government needs to give a fiscal stimulus right now because this is an unprecedented event and we know that the economy is slowing down. Fortunately for us the inflation numbers are quite benign and we are going to fall further. So, we do expect a 50 bps cut coming in December from RBI combined that with a fiscal stimulus, whichever way, you cut excise duty, petrol prices have to be drastically cut by Rs 5 or something like that to just give a booster to the economy because we are seeing a shock and you need something to neutralise it. It will have some impact on fiscal for this year but it is highly probably that some part of it is mitigated by one-off gains. So, these are calculated risks the government has to take. I am sure even they didn’t anticipate these sort of reactions but I would really hope that they act together, which is the monetary and the fiscal, acts together and not be so bothered about the fiscal deficit for the rest of this year because you will get some one-off gains next year and if you can revive this economy faster than just allowing it to revive the way it is which is slow and steady. It may be a bit too late. As I said it is a counterintuitive way of thinking that you actually increase the fiscal to get over this problem.

Latha: You are actually part of a fairly large group of people that believe that fiscal stimulus should come. What is different in what you are saying is that a lot of people were hoping for a large investment by the government if it got a large dividend or some such one-offs. But we had a Credit Suisse report which said that government appears to have lost its ability to spend. Road contracts after coming in thick and fast have started petering out. The bandwidth of the government to spend right down to the last bureaucrat has weakened according to that report. So, if it comes in the form of petrol price cuts then that is more market oriented and consumption oriented.

A: That is the easiest way of transferring wealth because the guy who uses a tractor to an auto rickshaw driver to a middle class family everybody benefits. And it flows immediately. You cut Rs 5 the entire economy benefits day one. There is nothing better than that because they have created a war chest because they have actually increased it, they have increased at least Rs 16 or 17 absolute over the last two years, so they have some cushion. It will lead to some strain on fiscal but these are times where even the rating agencies would take cognisance of that because India has had significant improvement in macro and we have not seen any change in the rating agencies stance. So, I don’t see because of this and if the fiscal goes up a bit knowing fully that you do have one off gains next year which can offset this is something which the rating agency should take cognisance, this is my guess, I don’t have any reach to them.

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Sensex sinks 389 pts, Nifty ends below 8000 on growth worries

It was a disappointing start to the week on Monday as equity benchmarks erased all 2016 gains. The BSE Sensex shed 432 points intraday as concerns over economy & earnings growth after demonetization and consistent outflow of funds on fears of likely Fed rate hike in December policy dented the market sentiment.

The 30-share BSE Sensex closed below the psychological 26000 level, down 385.10 points or 1.47 percent at 25765.14. The index fell for the sixth consecutive session today, the biggest losing streak since March 2015.

Dealers say margin calls triggered after the 50-share NSE Nifty breached the 8000-mark. It plunged 145 points or 1.80 percent to close at 7929.10.

Big brokerage houses started lowering earnings and GDP growth estimates to factor in the impact of demonetization.

Deutsche Bank expects the remainder of 2016 to be highly uncertain, which will keep markets volatile with a downward bias. It cut December 2016 Sensex target to 25,000 (from 27,000 earlier) as India will not remain immune to the outflow pressure seen across emerging markets, though balance of payments situation has improved sharply since the taper tantrum in May 2013.

Nifty Stock Performance

BSE Mid Cap

sectoral-performance

reduced its FY18 earnings growth estimates to 15 percent from 20 percent. Citi also lowered multiple to 15x (from 17x) one year forward consensus earnings to factor in uncertainty.

DBS has warned of major downside risks to growth due to the demonetisation exercise, and has estimated that the gross value added can come down by up to 0.80 percent lower than its 7.6 percent target.

The broader markets continued to underperform benchmarks as the BSE Midcap and Smallcap indices were down around 3 percent each on weak breadth. About five shares declined for every share rising on the exchange.

Meanwhile, bringing some relief for banks and non-banking finance companies (NBFCs) from demonetisation, the Reserve Bank of India today relaxed certain asset classification and provisioning norms in certain cases. The central bank has decided to allow banks 60 more days for recognition of loans as standard in certain cases. The revised norm is applicable for loans payable between November 1 and December 31.

Banks hit hardest with the Nifty Bank index falling 2.7 percent and PSU Bank down 6.9 percent. Bank of Baroda, PNB, SBI, Canara Bank, Allahabad Bank, OBC and Union Bank plunged 5-9 percent. HDFC Bank, ICICI Bank and Axis Bank fell over a percent.

Auto stocks like Tata Motors, Mahindra & Mahindra, Maruti Suzuki were down 3-3.5 percent while Tata Steel and BHEL slipped 3.5-4 percent. Reliance Industries and Sun Pharma bucked the trend with marginal gains.

Auto stocks like Tata Motors, Mahindra & Mahindra, Maruti Suzuki were down 3-3.5 percent while Tata Steel and BHEL slipped 3.5-4 percent. Reliance Industries and Sun Pharma bucked the trend with marginal gains.

ONGC ended higher as government will bear entire burden on sale of PDS kerosene and subsidised LPG for FY17. Technology stocks like Wipro, Mindtree, TCS and Tech Mahindra gained 0.2-1 percent on further fall in rupee.

European stocks were higher amid pause in dollar upside and rise in crude oil prices. France’s CAC, Germany’s DAX and Britain’s FTSE gained around half a percent, at the time of writing this article.

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Over 38 Million BSNL Users Can Now Pay Their Bills With MobiKwik

mobikwikMobiKwik, India’s largest independent mobile wallet, today announced its partnership with Bharat Sanchar Nigam Limited (BSNL), the government-owned telecommunication service provider for cashless payment of bills. The tie-up will enable customers to pay their phone bills without standing in queues and using cash currencies or cheques.

A large number of people across cities will be benefitted as BSNL serves 38 million users. This initiative will also enable customers to tide over the current currency shortage due to demonetisation of high-value bank notes.

Mrinal Sinha, Chief Operating Officer at MobiKwik said, “Our associations with BSNL is another step to serve landline users after demonetisation of high-value currency notes. MobiKwik is honored to support a cashless India and urges people to transact with wallets and digital money as much as possible.”

“The announcement of discontinuation of Rs 500 and Rs 1000 notes is a mind blowing initiative taken by Prime Minister Narendra Modi to curb black money in India. This is a historic policy change and will go down in democratic India’s history as more impactful than the economic reforms of 1990s. Our kids will read about this in their history and economics books. Within a 50 day period a billion Indians will change their payments behaviour – we will move from cash only to a cash-free economy. This a strong step taken by the Modi government and will benefit the growth of digital payments and digital banking in India. We (MobiKwik) are excited to be a part of this historic moment.” said Bipin Preet Singh, CEO of MobiKwik.

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