Archive for February 26, 2016

admin | February 26, 2016
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Expect A Booster Budget 2016

I wonder why we all should be worried about Budget 2016 ?
What Options do the FM has ? He has to come out with renewed promises, smartly use the words Development, Investor friendly, Agriculture, Rural Development, Health, Empowerment, Rurban, NAREGA ( perhaps a new name might be suggested ), Education etc . Than present a statistically consistent and correct numbers for the allocations to each sector. Reveal some further details that are absolutely necessary, like Fiscal Deficit, Revenue targets ..and not many more . And End with a poem or a quote , which is a bit catchy .
I am not ridiculing the massive efforts, but am trying to emphasis that do not expect a sea change when the goings are quite good . I would like to draw a special attention to the fact that the GOI exchequer , after meeting the revenue expenditures, will not and can not have any sizeable surplus. If the government wants to live upto its promises and expexctations. It must have judged the ability and possibility of its own set up to deliver the planned projects and implement the schemes. So What Can We Expect ?
Naturally an investor friendly, corporate friendly , tax payer ( the Savers) friendly, FII friendly, Multi national friendly budget to invest in the economy .It will have to give SOPS to local industries, Start Ups ,the Rural and Rurban Dwellers nad the Common Man .

So it is elementary my dear friends, if there is even a common sense wisdom, the FM will present a budget that will be a booster doze for the economy with a lot of energy which is being wasted.

Category: Uncategorized | Tags: , ,
admin | February 24, 2016
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Budget Expectations

The Budget Fever is picking up for the Budget 2016.
We all have read and heard many opinions and expectations .
Details apart, the following is quite visible and desirable

SWEETNERS

1… Reduce the burden of tax of common man by enhacing the exemption limit
2… Provide addition in ceiling of Sec 80C to provide incentive towards savings
3… The Exemption limit and 80C limits be made inflation adjustible henceforth
4…Enhance HRA, Edu Allo, Hosing loan interest etc deductions
5… Make Pension schemes more attractive
6… No TDS on Interest income from Banks upto Rs 50,000 pa
7… Withdraw in phases, the additional depreciation and similar incentives
8… Simplifications in Transfer pricing and normal assessment procedures
9… Reduce the Corporate rate of taxation

BITTER

1… Increase in Service Tax on certain services
2… Enhancing Wealth Tax and reintroduction of Estate Duty

GENERAL

Various Rural Schemes will be announced . NAREGA will be streamlined. Strict action against defaulting borrowers( NPA) will be announced

On the whole it will be a consumer oriented budget, giving higher purchasing power . The dependance on market borrowing and PPP will enhace substentially

NOW, LET’S Wait and Watch

Category: Finances, Taxation |
admin | February 17, 2016
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The NPA Volcano

I feel RBI deserves full credit for digging the surface of the NPA Volcano before it is too late. We as a nation and I in my individual capacity should be and are proud of their action.

A lot is being talked about NPA and therefore I prefer to be brief and to the point.

1. There is a need to redefine and large and willful defaulters. Their wings have to be curtailed. Some of the ways of curtailing or disciplining them can be :

a) Appointment of auditors should be by consortium of lenders. They should be provided additional special terms of reference.

b) The majority in the Board in no case should be with thedefaulting promoters’ group. Even without holding majority in the Board, the promoters can and should run the unit well within the permissible limit.

c) If, the above fails to remedy the situation, the management should be completely taken over and for that matter, out banking system will have to create a pool of professionals and other promoters with proven track record.

2. Over a long period of my career as a professional CA and with the experience of being professional independent director in one of the nationalised banks, I have seen that the name of the ‘consultant’, ‘adviser’ etc functionaries who peddled the Loan is not referred to in the files once the loan is disbursed and turns into NPA. In fact, there should be a directory of consultants etc. who have played a role during the relevant period.I am sure a clear track will emerge.

3. We need to bring in an element of incentive towards the loan which did not get converted in to NPA. The bank officers responsible and associated with such accounts and also the Borrowers need to be given incentives.

4. A time has come to have a relook at the constitution of the boards of the nationalized banks.Too much presence of Controlling authorities bring an element of undue influence as well.

5. As a practitioner, at BIFR, I also observed the tremendous delays in settling ( if at all it is settled ) a bad loan. The entire legal structure and the legal system needs to be re looked. Mere changing of law ( as envisaged in the amended Companies Act 2013 ) will not be adequate. The parties and institutions involved in delivery of justice needs a closer look. This includes the role and manning of DRTs, ARCs , Legal and other professional fraternities’.

These are some stray observations, but the fact remains that in the Banking Sector a major operation is required.If defaulting promoters are allowed to get away with Restructuring the Loan portfolios and Banks are saved through Injunction of more Capital what I fear is that there would be an indirect incentive for a willful defaulter to first commit a default and then take the bonanza of large scale write-offs and settle it.

Even the banks appear to be in a mood to declare a huge NPAs so that more capitalization is justified.

I am sure the readers will appreciate what I’m trying to point out.

Category: Finances, General, Uncategorized |