4.75 kms

 

4.75 kms on a humid saturday morning in Mumbai. Saving grace was some bit of breeze at few places. Have a great day folks. 

British Virgin Islands

 

Documentary on British Virgin Islands, the group of islands in the Caribbean which is ruled by the British, hence the prefix British to its name. 

It has got more than 50 islands but only about 16 of them are inhabited. Apart from tourism there is not much going on there, except for rum production which is locally made using sugar cane. There are some organic farming going on, but the mainstay of these islands are obviously the tourists, especially the billionaire Americans and Europeans with their cruise liners and yatch and all. 

The documentary picks up some three or four subjects and works on their story like the hermit crab race in one island, which sees a lot of frenzied betting, the rum production in one village, organic farming in another and the like. 

Its also the home for a lot of overseas banks which offer tax free status to the monies of the rich people around the world. So there's a huge presence of banks and their very minimal staff in the capital city. BVI is known as an offshore banking centre so i guess lots of transactions takes place running into billions of dollars. 

Nice documentary to watch, kept the interest intact. 

EWB for supply of services

 update from GST portal 

Advisory for Taxpayers regarding Generation of EWB where the 

principal supply is Supply of services.

16/09/2021

1. Representations have been received from various trade bodies stating that they are not

able to generate EWB bill for movement of those goods where their principle supply is 

classifiable as a service, since there is no provision for generating E-way Bill by entering

SAC (Service Accounting Code-Chapter 99) alone on the E- way bill portal.

2. To overcome this issue, the taxpayers are advised as below:

a) Rule 138 of CGST Rules, 2017, inter alia, states “Information to be furnished prior to

commencement of movement of goods and generation of e-way bill.-(1) Every registered

person who causes movement of goods of consignment value exceeding fifty thousand 

rupees….” 

Thus, E way bill is required to be generated for the movement of Goods.

b) Therefore, in cases where the principal supply is purely a supply of service and involving no

movement of goods, the e-way bill is not required to be generated.

c) However, in cases where along with the principal supply of service, movement of some

goods is also involved, e-way bill may be generated. Such situations may arise in cases of 

supply of services like printing services, works contract services, catering services, pandal

or shamiana services, etc. In such cases, e-way bill may be generated by entering the 

details of HSN code of the goods, along with SAC (Service Accounting Code) of services 

involved.

bad bank structure

 https://pib.gov.in/PressReleasePage.aspx?PRID=1755466

1. What isNational Asset Reconstruction Company Limited (NARCL)? Who has set it up?

 

NARCL has been incorporated under the Companies Act and has applied to Reserve Bank of India for license as an Asset Reconstruction Company (ARC). NARCL has been set up by banks to aggregate and consolidate stressed assets for their subsequent resolution. PSBs will maintain51% ownership inNARCL.

2. What is India Debt Resolution Company Ltd. (IDRCL)? Who has set it up?

 

IDRCL is a service company/operational entity which will manage the asset and engage market professionals and turnaround experts. Public Sector Banks (PSBs) and Public FIs will hold a maximum of 49% stake and the rest will be with private sector lenders.

3. Why is NARCL-IDRCL type structure needed when there are 28 existing ARCs?

 

Existing ARCs have been helpful in resolution of stressed assets especially for smaller value loans. Various available resolution mechanisms, including IBC have proved to be useful. However,considering the large stock of legacy NPAs, additional options/alternatives are needed and the NARCL-IRDCL structure announced in the Union Budget is this initiative.

4. Why is a Government Guarantee needed?

 

Resolution mechanisms of this nature which deal with a backlog of NPAs typically require a backstop from Government. This imparts credibility and provides for contingency buffers. Hence, GoI Guarantee of up to Rs 30,600 crore will back Security Receipts (SRs) issued by NARCL. The guarantee will be valid for 5 years. The condition precedent for invocation of guarantee would be resolution or liquidation. The guarantee shall cover the shortfall between the face value of the SR and the actual realisation. GoI’s guarantee will also enhance liquidity of SRs as such SRs are tradable.

 

5. How will NARCL and IDRCL work?

 

The NARCL will acquire assets by making an offer to the lead bank. Once NARCL’s offer is accepted, then, IDRCL will be engaged for management and value addition.

6. What benefit do banks get from this new structure?

 

It will incentivize quicker action on resolving stressed assets thereby helping in better value realization. This approach will also permit freeing up of personnel in banks to focus on increasing business and credit growth. As the holders of these stressed assets and SRs, banks will receive the gains. Further, it will bring about improvement in bank’s valuation and enhance their ability to raise market capital.

7. Why is it being set up now?

 

Insolvency and Bankruptcy Code (IBC), strengthening of Securitization and Reconstruction of Financial Assets and Enforcement of Securities Interest (SARFAESI Act) and Debt Recovery Tribunals, as well as setting up of dedicated Stressed Asset Management Verticals (SAMVs) in banks for large-value NPA accounts have brought sharper focus on recovery. In spite of these efforts, substantial amount of NPAs continue on balance sheets of banks primarily because the stock of bad loans as revealed by the Asset Quality Review is not only large but fragmented across various lenders. High levels of provisioning by banks against legacy NPAs has presented a unique opportunity for faster resolution.

8. Is the guarantee likely to be invoked?

 

Government guarantee will be invoked to cover the shortfall between the amount realised from the underlying assets and the face value of SRs issued for that asset, subject to overall ceiling of ₹30,600 crore, valid for 5 years. Since there shall be a pool of assets, it is reasonable to expect that realisation in many of them will be more than the acquisition cost.

9. How will Government ensure faster and timely resolution?

 

The GoI guarantee will be valid for five years and condition precedent for invocation of guarantee will be resolution or liquidation.Further, to disincentivize delay in resolution, NARCL has to pay a Guarantee fee which increase with passage of time.

10. What will be the capital structure of NARCL and how much will Government contribute?

 

Capitalization of NARCL would be through equity from banks and Non-Banking Financial Companies (NBFCs). it will also raise debt as required.The GoI guarantee will reduce upfront capitalization requirements.

11. What will be NARCL’s strategy for resolution of stressed assets?

 

NARCL is intended to resolve stressed loan assets above ₹500 crore each amounting to about ₹ 2 lakh crore. In phase I, fully provisioned assets of about Rs. 90,000 crores are expected to be transferred to NARCL, while the remaining assets with lower provisionswould be transferred in phase II.

Congo: a journey to the heart of Africa

 

BBC documentary on Congo, the giant country the size of Europe in the middle of Africa. 

The team travels from Kinshasha, on the western coast of the nation bordering the Atlantic Ocean to Lumumbashi, on the eastern coast. The country is huge but racked with numerous problems from corruption, to poverty to lack of development. 

The colonizers looted the country like anything forcing its citizens to become slaves and get beaten or killed. Belgium was the worst offender with King Leopold a brutal king greedy of the riches this country had to offer. 

Then Mobutu Sese Seko, the Zairean leader who ruled the country with an iron fist for more than 4 decades was an autocratic dictator and kept its citizens on impoverished state. He had Patrice Lumumba the only popular leader of Congo, killed. The country is rich in minerals like copper, cobalt, gold, diamonds etc. which is why even the eastern neighbours like Burundi, Rwanda, Uganda have eyes on those natural resources. 

The country has immense potential to tap hydro electric power with raging rapids along the Congo river, but very little development. Then there is fighting on the eastern part of the country in Goma, where the government is not to be seen at all. Local leaders have sprung up destroying the peace and potential of this country. There are about half a million refugees within the country itself.

Interesting documentary this, the presenter goes from Kinshasha to Mbandaka, Gbadolite (which was the home town of Mobutu) Kisangani, Goma, Beni, Kalemie and finally to Lubumbashi. The country is breathtakingly beautiful with its rain forests, rivers, mountains, wild life, gorillas, its rich minerals but poor state of governance. 

clearing membership

 IFSCA has vide its circular dated 15th September, 2021 allowed IFSCA recognized non bank custodians who have set up entity through their branch in IFSC GIFT City to become a clearing member. Earlier they had allowed overseas entities to operate as a clearing member through their branch office. So this i guess is for the Indian non bank custodians to operate as a clearing member through their branch office. Some conditions are stipulated as under:

https://ifsca.gov.in/Viewer/Index/228

Non-Bank Entity recognised as a custodian by IFSCA

2. Any non-bank entity recognised as a custodian of assets/securities by IFSCA through the branch structure, shall be permitted to become a Clearing Member of a Clearing Corporation in GIFT-IFSC. For this purpose, the entity shall comply with the following conditions:
   a) The entity can clear and settle trades only of its custodial clients
   b) The entity should be ring fenced financially, technologically, and operationally from its parent company and its functions, as a clearing member, shall be limited only to clearing and settlement services of its custodial clients.
   c) The entity shall ensure financial segregation by allocating funds to the tune of USD 1,500,000 (USD 1.5 mn) towards its clearing and settlement operations. The entity shall submit a declaration to the Authority in this regard.
   d) The entity shall participate in the Settlement Guarantee Fund contribution (SGF), as decided by the clearing corporation from time to time.
   e) The total exposure which the entity shall take on behalf of its registered clients shall be determined by its Board.
   Additional requirements
3. All the other fees applicable to a clearing member in GIFT-IFSC shall be applicable to such an entity.
4. The entity shall comply with all the necessary rules, bye-laws and guidelines prescribed by the clearing corporation with which it is registered as a clearing member and the Authority from time to time.
5. The entity shall have adequate mechanisms for the purposes of reviewing, monitoring, and evaluating the controls, systems, procedures and safeguards.

PLI for auto & drone industry

 https://pib.gov.in/PressReleasePage.aspx?PRID=1755062

aking steps forward towards the vision of an ‘Aatmanirbhar Bharat’, Government led by Hon’ble Prime Minister, Shri Narendra Modi, has approved the PLI Scheme for Automobile Industry and Drone Industry with a budgetary outlay of ₹ 26,058 crore. The PLI scheme for the auto sector will incentivize high value Advanced Automotive Technology vehicles and products. It will herald a new age in higher technology, more efficient and green automotive manufacturing.

PLI Scheme for Automobile Industry and Drone Industry is part of the overall announcement of PLI Schemes for 13 sectors made earlier during the Union Budget 2021-22, with an outlay of ₹ 1.97 lakh crore. With the announcement of PLI Schemes for 13 sectors, minimum additional production in India is expected to be around ₹ 37.5 lakh crore over 5 years and minimum expected additional employment over 5 years is nearly 1 crore.

The PLI Scheme for the auto sector envisages to overcome the cost disabilities to the industry for manufacture of Advanced Automotive Technology products in India. The incentive structure will encourage industry to make fresh investments for indigenous global supply chain of Advanced Automotive Technology products. It is estimated that over a period of five years, the PLI Scheme for Automobile and Auto Components Industry  will lead to fresh investment of over  ₹42,500 crore,  incremental production of over  ₹2.3 lakh crore and will create additional employment opportunities of over 7.5 lakh jobs. Further this will increase India’s share in global automotive trade.

The PLI Scheme for auto sector is open to existing automotive companies as well as new investors who are currently not in automobile or auto component manufacturing business. The scheme has two components viz Champion OEM Incentive Scheme and Component Champion Incentive Scheme. The Champion OEM Incentive scheme is a ‘sales value linked’ scheme, applicable on Battery Electric Vehicles and Hydrogen Fuel Cell Vehicles of all segments. The Component Champion Incentive scheme is a ‘sales value linked’ scheme, applicable on Advanced Automotive Technology components of vehicles, Completely Knocked Down (CKD)/ Semi Knocked Down (SKD) kits, Vehicle aggregates of 2-Wheelers, 3-Wheelers, passenger vehicles, commercial vehicles and tractors etc.

This PLI Scheme for automotive sector along with the already launched PLI scheme for Advanced Chemistry Cell (ACC) (₹18,100 crore) and Faster Adaption of Manufacturing of Electric Vehicles (FAME) (₹10,000 crore) will enable India to leapfrog from traditional fossil fuel based automobile transportation system to environmentally cleaner, sustainable, advanced and more efficient Electric Vehicles (EV) based system.

The PLI Scheme for the Drones and Drone components industry addresses the strategic, tactical and operational uses of this revolutionary technology. A product specific PLI scheme for drones with clear revenue targets and focus on domestic value addition is key to building capacity and making these key drivers of India’s growth strategy. The PLI for Drones and Drone components industry, will over a period of three years, lead to investments worth ₹ 5,000 Crore, increase in eligible sales of ₹ 1500 crore and create additional employment of about 10,000 jobs.