1. RBI allows payments for cross-border trade in rupee
Tags: Economy/Finance
The Reserve Bank of India (RBI) on 11 July allowed invoicing and payments for international trade in rupees.
Rupee Settlement System for International Trade
Banks acting as authorized dealers for such transactions would be required to obtain prior approval from the regulator to facilitate the same.
Under the invoicing system, all exports and imports can be denominated and invoiced in rupees.
The exchange rate between the currencies of two trading partner countries can be determined by the market.
Exporters and importers can now use a special Vostro account linked to the partner country's bank for receipts and payments in Rupees.
A Vostro account is one that is opened by a bank on behalf of a foreign bank in its home country.
These accounts can be used to pay for projects and investments, manage import or export advances, and invest in Treasury bills.
Bank guarantees, adjustment of export receivables, advances for exports, utilization of surplus funds, approval process, documentation etc. will be covered under FEMA rules.
Why did RBI take this step?
The rupee is at a historically low level against the dollar.
This mechanism has been brought in to facilitate trade with sanctioned countries.
Payments became difficult for exporters immediately after the Russo-Ukraine War broke out.
Payment issues with Russia could be eased as a result of the Trade Facilitation Mechanism introduced by RBI.
The move will also reduce the risk of forex fluctuations, especially in view of the Euro-Rupee parity.
This can be seen as the first step towards 100% convertibility of rupee.
This will also help to stabilize the rupee.
Many countries including Sri Lanka and some countries in Africa and Latin America are facing foreign exchange crunch.
The new mechanism will help India promote its exports.
2. R. Dinesh elected as President of CII for 2022-23
Tags: Economy/Finance Person in news
R Dinesh, Executive Vice President, TVS Supply Chain Solutions, has been named as the President of the Confederation of Indian Industry (CII) for 2022-2023.
Important facts
He previously served as the Chairman of National Committees on Logistics, CII Family Business Network India Chapter Council, CII Tamil Nadu State Council and CII Institute of Logistics Advisory Council.
From 2018 to 2019, he also served as the President of CII Southern Region.
ITC's Chairman and Managing Director Sanjiv Puri has been elected as the Vice-Chairman of the Confederation of Indian Industry (CII) for the financial year 2022-23.
Sanjeev Bajaj, Chairman and Managing Director, Bajaj Finserv Limited will continue as the chairman of the organisation for the current financial year.
About Confederation of Indian Industry (CII)
CII is a non-profit and non-governmental organisation.
The objective of CII is to achieve a conducive environment for the development of industry and civil society in India.
It was established in 1895.
It has over 8,000 members from both the public and private sectors.
3. Global Findex Database 2021
Tags: Economy/Finance
The World Bank recently released the “Global Findex Database 2021”.
Major findings of the report
Account ownership
According to this report, account ownership has increased worldwide.
Today three out of four adults have a financial account, according to this report. Yet 1.4 billion adults do not have a bank account.
Account ownership has increased by 50% worldwide, with 76 percent of the adult population having access to accounts.
Account ownership has increased widely in dozens of developing economies, and most new accounts have been opened in India and China.
Access to Formal Banking
The bulk of the global population (130 million and 230 million, respectively) without formal banking lives in India and China.
Men in developing countries accounted for 74%, while women were six points behind, with 68% of the accounts.
Unbanking
Globally 24% of adults are unbanked, with one of various reasons being a lack of money, with distance being a barrier for 31% of unbanked adults.
People who do not have an account with any financial institution or mobile money service provider are classified as unbanked.
Globally, 64% of unbanked adults are educated at the primary level or below.
36% of unbanked adults worldwide say financial services are too expensive.
Covid-19 and digital payments
In 2021, 18% of adults in developing countries paid utility bills directly from the account. About one-third of these bills were paid online for the first time.
Mobile money
Mobile Money is supporting financial inclusion in sub-Saharan Africa, especially for women.
There are 11 economies where adults have more mobile money accounts than financial institution accounts, all located in sub-Saharan Africa.
4. Vivo India transferred Rs 62,476 crore to China to avoid taxes
Tags: Economy/Finance National News
According to a statement issued by the Enforcement Directorate, Rs 62,476 crore has been "illegally" transferred to China by smartphone maker Vivo to evade payment of taxes in India between 2017 and 2021.
Important facts
18 companies that were incorporated fraudulently helped the smartphone maker Vivo to transfer 50 percent of the turnover outside India to mainly China.
Under the provisions of the Prevention of Money Laundering Act (PMLA), 119 bank accounts of entities with a gross balance of Rs 465 crore have been seized so far.
While transferring money to China, Vivo India has shown losses in most of its associate firms.
The Ministry of Corporate Affairs (MCA) has filed a police complaint against Vivo's subsidiary Grand Prospect International Communication Pvt Ltd (GPICPL), its directors, shareholders, certifying professionals etc.
Prevention of Money Laundering Act
It was enacted in 2002 and came into force in 2005.
The objective of the Act is to prevent money laundering, that is, the process of converting black money into white.
The Act empowers government officials to confiscate property acquired through illegal sources and money laundering.
Under the Act the burden of proof lies with the accused, who has to prove that the suspect property has not been obtained through unfair means.
Enforcement Directorate
It is a specialised financial investigation agency under the Department of Revenue, Ministry of Finance, Government of India.
It is a law enforcement and economic intelligence agency responsible for enforcing economic laws and fighting economic crime in India.
Its name was changed to Enforcement Directorate (ED) in 1957.
Its headquarters is in New Delhi and has many regional offices all over the country.
The Directorate of Enforcement (ED) - Sanjay Kumar Mishra
5. HDFC, ICICI, Axis Bank allowed to provide services for overseas procurement
Tags: Economy/Finance
The Defence Ministry on 7 July has approved three Private Sector Banks to provide financial services in overseas procurement.
The ministry has allowed HDFC Bank, ICICI Bank and Axis Bank to provide letter of credit and direct bank transfer business for overseas procurement.
In this regard, PCDA on behalf of the Ministry of Defence had recently signed a Memorandum of Understanding (MoU) with these three banks in New Delhi.
Till now only authorized public sector banks were used to provide these services to the Ministry of Defence.
For the first time, three private sector banks have also been allowed by the Defence Ministry to provide financial services for overseas procurement.
Selected banks can be allotted with LC business of Rs 2,000 crore (Rs 666 Crore for each bank under both capital as well as Revenue) on capital and revenue side for a period of one year on concurrent basis.
The performance of these banks will be regularly monitored so that further action can be taken as required.
6. Hurun India Future Unicorn Index 2022
Tags: Economy/Finance
According to the findings of the recently released Hurun India Future Unicorn Index 2022 by Hurun Research Institute, Bengaluru continues to be the start-up capital of India. It is home to 46 possible unicorns.
After Bangalore, Delhi NCR has 25 potential unicorns.
Mumbai is in third place with 16 possible unicorns.
Important facts of the index
According to this index, there will be 122 new unicorns in India in the next two to four years.
Startups Zepto, Shiprocket, Turtlemint are in the top list of potential unicorns according to this report.
Classification of companies
Will-Be Unicorns – Companies that were founded after 2000 and were valued at least US$1 billion.
Gazelles – Companies that are likely to become unicorns in the next two years.
The Gazelles are expected to be valued between USD 500 million and USD 1 billion.
The Gazelles pack is led by Shiprocket, a five-year-old logistics tech start-up.
Shiprocket is followed by Zepto, Turtlemint, Ather Energy and Vivriti Capital.
The other five start-ups on the list include Ninjakart, Rapido, Dunzo, Cleartax and Twin Health.
Cheetah – The start-up that could turn into a unicorn in the next four years.
Pepperfry leads the cheetah pack. After this comes the number of Juspay and Mswipe Technologies.
Sugar Cosmetics, ZestMoney, Waycool, QMath, Bluestone, Winzo are other startups in this list.
What is a Unicorn Company?
A unicorn is a private start-up company, valued at over USD 1 billion.
7. Govt hands over Nilachal Ispat Nigam Limited to Tata Steel Long Products Limited
Tags: Economy/Finance
In Odisha, the Department of Investment and Public Asset Management (DIPAM) completed the strategic disinvestment process of Neelachal Ispat Nigam Limited (NINL) on 4 July.
The disinvestment transaction was completed with the transfer of 93.7 per cent shares of the Joint Venture partners namely, MMTC, NMDC, BHEL, MECON.
All four are Central Public Sector Enterprises and two PSUs of Government of Odisha, OMC and IPICOL to the strategic buyer Tata Steel Long products Limited.
The acquisition is completed in accordance with the terms and conditions of the share sale and purchase agreement entered into on March 10, 2022 and as per the procedure of Department of Disinvestment and Public Asset Management (DIPAM).
The total consideration paid by TSLP is Rs 12,100 crore.
NINL is the second successful privatization of the present government.
Air India, the first company in the privatization list, was also bought by the Tata group.
There is also a plan to increase the capacity of NINL to 10 million tonnes per annum by 2030.
The NINL was non-functional for over two years.
NINL was not functioning for more than two years and was running at a loss.
The disinvestment of the NINL will open up a big investment window in Odisha.
About Tata Steel
Tata Steel was established in India in 1907 as Asia's first integrated private steel company.
It is one of the top global steel companies with an annual crude steel capacity of 34 million tonnes per annum.
It is spread across five continents with an employee base of over 65,000 including its subsidiaries, affiliates and joint ventures.
Tata Steel has won several awards including World Economic Forum's Global Lighthouse Recognition for its Jamshedpur, Kalinganagar and I Jamuiden plants.
It has won the Prime Minister’s Trophy for the best performing integrated steel plant for 2016-17.
8. Business Reforms Action Plan (BRAP) Report, 2020
Tags: Economy/Finance
%20Report%2C%202020%20copy.jpg)
Recently the Union Finance Minister Nirmala Sitharaman has released the Ease of Doing Business (EoDB) ranking of the Ministry of Commerce and Industry, which is based on the Business Reforms Action Plan (BRAP) Report, 2020.
The objective of the ranking is to promote ease of doing business to encourage investors and ease of doing business across the country through a healthy competitive environment through a system of assessing states based on their performance in the BRAP.
The parameters include various areas, such as construction permits, labour regulation, environmental registration, access to information, land availability and single window system.
The Business Reforms Action Plan (BRAP) report has classified the states into four categories -
Top Achievers
Seven states - Andhra Pradesh, Gujarat, Haryana, Karnataka, Punjab, Telangana and Tamil Nadu - were classified as 'Top Achievers' in the Ease of Doing Business ranking of states and union territories.
Achievers
Himachal Pradesh, Uttar Pradesh, Odisha and Madhya Pradesh are the other states classified as achievers in the ranking.
Aspirants
Seven states - Goa, Assam, Kerala, Rajasthan, Jharkhand, Chhattisgarh and Bengal - have been classified as 'aspirational' districts.
Emerging Business Ecosystem
Six states - Manipur, Meghalaya, Nagaland, Tripura, Puducherry and Jammu and Kashmir - were 'emerging trading ecosystems'.
About BRAP
It was launched in the year 2015.
It was introduced to encourage a healthy competition among the states.
This will help in attracting investment and ease of doing business in each state.
The Department for Promotion of Industry and Internal Trade has been assessing the performance of States/UTs since 2014 in implementing the reforms prescribed in the BRAP exercise.
So far, the estimates of States/UTs for the years 2015, 2016, 2017-18, 2019 and 2022 have been released.
9. Establishment of Financial Services Institutions Bureau in place of Banks Board Bureau
Tags: Economy/Finance
The Cabinet Appointments Committee (ACC) has passed a government resolution to establish the Financial Services Institutions Bureau (FSIB) in place of the Banks Board Bureau (BBB).
The new framework was proposed by the Department of Financial Services, Ministry of Finance.
The Delhi High Court had nullified the BBB's power to select directors of public sector undertakings, general insurance companies and the government had already implemented the decision by cancelling all appointments of then serving directors chosen by the BBB.
Financial Services Institutions Bureau
The Bureau of Financial Services Institutions will select the heads of public sector banks and insurance companies.
The FSIB will have a clear mandate to issue guidelines and select general managers and directors of state-run non-life insurance companies, general insurers and financial institutions.
FSIB will be the single body to make recommendations for appointment of whole time directors and non-executive chairman in public sector banks, India Private Limited Company and financial institutions.
The Department of Financial Services will make necessary amendments in the first Nationalised Banks (Management and Miscellaneous Provisions) Scheme 1970/1980 (Revised).
Chairman of FSIB- ACC has approved the appointment of Bhanu Pratap Sharma as the initial chairman of FSIB for two years. He is also the former president of BBB.
Banks Board Bureau (BBB)
The Banks Board Bureau (BBB) was formed in the year 2014 based on the recommendations of PJ Nayak to address the challenges faced by the banking sector of the country.
The BBB functions as an autonomous recommender body.
The Banks Board Bureau was a public authority as defined in the Right to Information Act, 2005.
Besides recommending personnel for public sector banks, the bureau was also entrusted with the task of recommending personnel for appointment as directors in state-owned insurance companies.
It was also entrusted with the task of liaising with the Board of Directors of all PSBs to devise suitable strategies for their growth and development.
10. GST (Goods and Services Tax) Day
Tags: Economy/Finance Important Days
%20Day%20copy.jpg)
To commemorate the anniversary of the implementation of the historic tax reform of the Goods and Services Tax, 1 July is observed as GST (Goods and Services Tax) Day.
Important facts
The first GST Day was celebrated on 1st July 2018 to mark the first anniversary of the new indirect tax regime i.e. Goods and Services Tax (GST).
GST was implemented on the intervening night of 30 June and 1 July 2017 in a function held in the Central Hall of Parliament.
On 29 March 2017, the Goods and Services Tax Act was passed in the Parliament and the Act came into force on 1 July 2017.
GST was enacted as the 101st Constitutional Amendment Act, 2016.
What is GST?
GST is an indirect tax which has been implemented with the aim of making India a unified common market.
It is a single tax levied on the supply of goods and services from the producer to the consumer.
Under GST, on the one hand indirect taxes like Central Excise Duty, Additional Excise Duty, Service Tax, Countervailing Duty are included at the Central level.
On the other hand, state-levied value addition tax, entertainment tax, octroi and entry tax, luxury tax, etc. are also included.
It was introduced with the slogan 'One Nation One Tax'.
Tax Structure under GST
Central GST (CGST) to cover excise duty, service tax etc.
State GST (SGST) to cover VAT, luxury tax etc.
Integrated GST (IGST) to cover inter-state trade.
IGST itself is not a tax but a tax system to coordinate state and union taxes.
It has a 4-tier tax structure of 5%, 12%, 18% and 28% for all goods and services under the slab.
