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THE TRIBUNE SPECIALS
50 YEARS OF INDEPENDENCE

TERCENTENARY CELEBRATIONS
B U S I N E S S

SBI net up 46%, pays 290 pc dividend
Mumbai, May 9
Beating the economic slowdown, country's biggest lender SBI today reported a 45.62 per cent growth in net profit at Rs 2,742.31 crore for the quarter ended March 31, 2009 against Rs 1,883.25 crore in the corresponding period last fiscal.

Coming soon! Single-digit lending rates
New Delhi, May 10
“It is going to be a regime of cheaper loans in India,” said a banker, who had attended the bankers’ meeting held by the RBI last month. The banker, on the condition of anonymity, said prime lending rates (PLR) were likely to come down to a single-digit level, as low as 6 per cent. At present, the PLR is around 12 per cent.

Aviation Notes
AI ‘an orphaned child’
A renowned civil aviation authority has posed an all-important question: “Is there any salvation for Air India (National Aviation Company Limited)”? To this, a group of equally accomplished commanders and engineers emphasise that ‘there is none whatsoever as long as it wears the vital tag of puppet for political bigwigs to successfully exploit it’.





EARLIER STORIES



A security guard stands in front of the American International Group (AIG) building in Tokyo
A security guard stands in front of the American International Group (AIG) building in Tokyo on Saturday. AIG is close to reaching a deal to sell the building to Nippon Life Insurance for about $1 billion, an industry source said. — AFP

Investor Guidance
No deduction on ELSS investments in child’s name
Q: I wish to invest in Rs 1 lakh in ELSS tax saving Mutual fund. If I invest in the name of my son with myself as guardian will I get tax exemption or I have to invest it in my name.
— Sanjay
A: ELSS investments made in the name of child, major or minor, are not eligible for the benefit of deduction u/s 80C.

Courses on financial markets
New Delhi, May 9
In a unique initiative to train young minds on the nuances of financial markets, IGNOU is launching a series of short-term and long-term practice- oriented courses in equity and bond markets. The practice-oriented courses devised in modular patterns will deal with areas like equity, derivative, currency and professional practices in financial markets.

 





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SBI net up 46%, pays 290 pc dividend
Tribune News Service & PTI

Mumbai, May 9
Beating the economic slowdown, country's biggest lender SBI today reported a 45.62 per cent growth in net profit at Rs 2,742.31 crore for the quarter ended March 31, 2009 against Rs 1,883.25 crore in the corresponding period last fiscal.

The bank closed fiscal 2008-09 with an impressive 36 per cent increase in net profit at Rs 9,121.2 crore, up from Rs 6,729.1 crore in the previous fiscal.

During the March quarter 2009, interest income of the bank grew by 28 per cent to Rs 17,342.39 crore from Rs 13,576.73 crore in the same quarter previous fiscal.

Other income increased by 67 per cent to 4,718.2 crore during the quarter against Rs 2,817.2 crore in the same period a year ago. In the same time the total income rose by 34.57 per cent to Rs 22,060.61 crore from Rs 16,393.93 crore in the corresponding period a year ago.

The bank has declared a dividend of 290 per cent at the rate of Rs 29 per share for the financial year 2008-09.

The bank’s non-performing assets (NPAs) remained under control while contribution of bulk deposits fell by 332 basis points during the fiscal.

For fiscal 2008-09, the total income of SBI rose to Rs 76,479.2 crore against Rs 57,645.2 crore a year ago, up by 33 per cent.

Interest income stood at Rs 63,788.43 crore, up 30 per cent from Rs 48,950.31 crore in the previous fiscal.The bank's other income surged to Rs 12,691 crore against Rs 8,695 crore registering an increase of 45 per cent.

Deposits grew 38.08 per cent in FY 2009. Current account savings account grew by 376 basis points at 17.5 per cent, auto loans grew 36 per cent. The bank's advances grew by 29.8 per cent against the industry average of about 17 per cent.

However, due to high cost of deposits, the Net interest Margin for FY 2009 fell to 2.93 per cent against 3.07 per cent recorded last fiscal. NPAs have declined to 1.76 per cent against 1.78 per cent while gross NPAs also slipped to 2.84 per cent compared to 3.04 per cent in the previous year. The capital adequacy ratio of SBI stood at 14.25 per cent at the end of March 2009, against the regulatory requirement of 9 per cent.

On the the consolidated basis, the SBI group posted a 22 per cent increase in net profit after minority interest at Rs 10,955.2 crore for the year ended March 31, 2009 compared to Rs 8,960.6 crore a year ago.

During the year total income crossed trillion mark to Rs 1,13,093 crore, up 25 per cent against Rs 90,218.8 crore.

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Coming soon! Single-digit lending rates
Bhagyashree Pande
Tribune News Service

New Delhi, May 10
“It is going to be a regime of cheaper loans in India,” said a banker, who had attended the bankers’ meeting held by the RBI last month. The banker, on the condition of anonymity, said prime lending rates (PLR) were likely to come down to a single-digit level, as low as 6 per cent. At present, the PLR is around 12 per cent.

The second largest bank in the country, Punjab National Bank (PNB), has said that it might gradually bring the lending rate to around 9 per cent. PNB’s PLR currently stands at 11 per cent. The bank said it would curb sub-PLR loans so as to introduce greater transparency in the interest rate structure and pricing.

“Our objective is to bring PLR down and give a more equitable interest rate structure and bring more transparency in the system,” said PNB chairman K C Chakrabarty while talking to The Tribune.

Oriental Bank of Commerce executive director Ratnakara Hegde said, “The lending rate will definitely come to a single-digit level gradually, but a lot will depend on the economic situation, the way it pans out.”

Six years ago, RBI had allowed the banks to lend below sub-PLR, which became the bargaining power in the hands of big corporates, who asked for loans at 3-5 per cent below the PLR as they raised big amounts. Ample liquidity also helped banks to lend money below PLR. But now, with the RBI giving full freedom to the banks to cut rates, bankers will try to slash rates and make the system transparent. Another reason for transparency is that the demand for loans from other corporates is also increasing, and it is becoming easier to raise funds abroad at a far cheaper rate than from the domestic market.

“Bringing down PLR and ensuring transparency in the system assumes greater significance as nearly 75 per cent of the loans given by banks are below their benchmark rates,” said a banker.

However, the timeline within which this will be done remains unclear.

But the bad news is that the rate of deposits will also go down from the present 8 per cent. “I have no choice but to bring the deposit rates down, if lending has to be cheaper,” said Chakrabarty.

However, the bank’s PLR will only apply to commercial and corporate borrowers and not to lending that is directed by RBI, like loans to farmers, exporters and education loans. These loans will continue to be below PLR, as banks are mandated to lend to farmers at 7 per cent and exporters at 250 basis points below their PLR. Home and education loans will also be given at sub-PLR rates.

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Aviation Notes
AI ‘an orphaned child’
by K.R. Wadhwaney

A renowned civil aviation authority has posed an all-important question: “Is there any salvation for Air India (National Aviation Company Limited)”?

To this, a group of equally accomplished commanders and engineers emphasise that ‘there is none whatsoever as long as it wears the vital tag of puppet for political bigwigs to successfully exploit it’.

In the complex airline industry in the world, Air India is perhaps the only carrier in which the official of the status of chairman-cum-managing director (CMD) is deprived of functioning commercially, professionally and with an eye on profit. He has to seek ‘clearance’ from top for even minor decisions. When there is so much of interference into day-to-day functioning, where is the chance of its sustaining serene flight path and steady growth?

Raghu Menon, a thorough professional, realistic and competent bureaucrat, was only 13 months into his contracted period when he was relieved of his responsibilities as the CMD for his taking decision in the interest of physical health of the airline.The decisions pertaining to ‘ground handling’ and appointment of regional director (north zone) were so ‘minor’ that even a director could have taken them. But the CMD's role in doing so was objected to by the powers that-be and he was ‘eased out’ from the ‘hot seat’.

His replacement has been appointed for a period of three years. He is said to wear two-three hats. It is difficult to predict whether he will sustain into the office for the ‘contracted period’. Analysts say that he will hold on to the post if he adheres to the slogan of ‘yes sir’, but if he chooses the path of independence, his fate may be the same as that of Menon. This is the tragedy with the national carrier, which, during the days of JRD and subsequently, wore the label of ‘Maharaja’. Now, it is virtually ‘an orphaned child’, tossed about as nobody. Only God can save the ‘Maharaja’!

At Mumbai, an Air India (domestic) aircraft rammed into the aero-bridge. The inquiry is being instituted in the incident. Similar kind of incidents keep happening, bringing needless negative publicity to the airline, which, after meaningless merger, is ailing more than it was. Then Indian Airlines and Air India were on the verge of ‘turning-about’ but the political will brought about the merger.

The plight of private airlines, known and unknown, and with or without money-muscle, has suddenly nosedived. Who is to blame for this abysmal decline? None, except the government. Since liberalisation in 1990, the government has been leading the private operators to the ‘garden path’ and granting them the ‘licence’ to collect turbine fuel from three oil corporations on credit for an unlimited period. If there is a condition of the credit for the limited period, it is said to be only on paper. As a result, all, including two big private airlines, are now neck-deep in arrears. Their ‘dues’ have become so ‘fat’ that they cannot bear the burden of its weight.

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Investor Guidance
No deduction on ELSS investments in child’s name
by A.N. Shanbhag

Q: I wish to invest in Rs 1 lakh in ELSS tax saving Mutual fund. If I invest in the name of my son with myself as guardian will I get tax exemption or I have to invest it in my name.

— Sanjay

A: ELSS investments made in the name of child, major or minor, are not eligible for the benefit of deduction u/s 80C.

Extension of PPF a/c

Q: In one of your Q&As you stated that a PPF account after maturity can be extended for any number of block periods — there is no limit on how many times you can extend the account.

My banker has stated that only two extensions are permitted and, therefore, I will have to withdraw the amount on April 1, 2010. However, I am interested in continuing with the PPF account with yearly contribution.

Please let me know the notification/circular allowing extension of the block period without any time limit so that I may show the same to my banker. Your early response will be greatly appreciated.

— M. P. Gajaria

A: The note under Sec. 9(3) of PPF Scheme, 1968 states, "A subscriber may at his option (to be exercised before the expiry of the first year of every extended block period) avail of this facility for a further block of 5 years on expiry of 20 years or on expiry of 25 years and so on, from the end of the year in which the initial subscription was made."

Unfortunately, many of the accounts offices miss the words, 'and so on.', and, therefore, feel that the account is required to be closed on expiry of 25 years.

Rebate on HRA

Q: I stay in Bangalore in a rented house. I claim HRA for the same. I have constructed house in Harihar, and taken loan for the same. My parents stay in that house. Now can I claim tax exemption on the loan and also get HRA benefit?

— Ramesh Babu

A: Yes, you can. The provisions relating to HRA and home loan interest deduction are independent of each other. HRA deduction is available as long as you pay rent, regardless of whether you own any property, whether in the same town/city or not. Similarly, as long as you pay interest on housing loan, the interest is deductible, even if you stay in a rented house.

IT return

Q: I am a government employee and also a investor in capital market which ITR form should I have to use ITR1 or ITR2.

— Bhatia

A: ITR-1 is meant for those who have income from salary and interest. ITR-2 is for those who do not have income from business or profession. Since investment in capital market is not your business, you should use ITR-2.

Refund of TDS

Q: In the case of my daughter, total taxable income from salary (after applicable deductions) and other incomes like bank and FD interest is less than basic taxable limit for women. This means that tax payable for F. Y. 2008-09 is nil. Therefore, she was not going to file her tax return.

However, TDS has been deducted by the employer from salary and the bank from interest with this I reckon she should be entitled for tax refund. Can this be claimed while filing the tax return? If so, she would be better off actually filing her return, even though her taxable income is nil.

— Mainkar

A: The answer to your question is in the positive. Your daughter can claim the refund due to her by filing her tax return.

The tax return is mandatorily to be filed if the gross total income of a person, before applying deductions, is more than the basic exemption limit. Therefore, even if the income falls below the basic limit after availing of deductions, nonetheless, tax return needs to be filed.

Remittances by Residents

Q: I am retired Government of India (Postal) Employee. At present I am "immigrant to USA" for my prolonged high cost treatment of cancer and heart trouble. If I can go to India with medical permission, on return journey back to the US, how much amount can I bring with me through foreign exchange? Or are there other ways to defray my expenses here i.e. say from my pension deposited in India. Kindly advise

— S. Reddy

A: A Resident can remit up to US$ 1,00,000 for the following purposes :

a) Employment abroad.

b) Emigration.

c) Maintenance of close relatives abroad.

d) Education abroad.

e) Medical Treatment abroad.

Exchange for medical treatment can be released on the basis of self declaration without any hassles and any loss of time and without insisting on any estimate from the hospital or doctor either in India or abroad. For amount exceeding this limit, an estimate from the doctor in India or hospital/doctor abroad, is required to be submitted. A person who has fallen sick after proceeding abroad is also entitled for the same. The limit on exchange released to a person accompanying as an attendant to a patient going abroad for medical treatment/check-up is US$ 25,000.

As regards emigration, the forex released is only to meet the incidental expenses in the country of emigration. No forex can be remitted outside India for earning points or credits.

Moreover under a special scheme, Resident individuals can remit up to the limit of US$ 200,000 per financial year (Apr-Mar) for any permitted capital and current account transactions or a combination of both. All other transactions which are otherwise not permissible under FEMA and those in the nature of remittance for margins or margin calls to overseas exchanges or overseas counterparty are not allowed. Banks should not extend any credit facilities for such remittances, including security of the deposits.

Under this Scheme Resident individuals (and not corporates, partnership firms, HUF, Trusts, etc.), including minors, can invest in MFs, Venture Funds, unrated debt securities, promissory notes, etc. Further, the resident can invest in such securities out of the bank account opened abroad under the Scheme. Acquire and hold immovable property or shares (of listed companies or otherwise) or debt instruments or any other asset outside India such as objects of art subject to the extent of Foreign Trade Policy.

The facility under the Scheme is in addition to those already available for private travel, business travel, studies, medical treatment, etc.

The authors may be contacted at wonderlandconsultants@yahoo.com

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Courses on financial markets

New Delhi, May 9
In a unique initiative to train young minds on the nuances of financial markets, IGNOU is launching a series of short-term and long-term practice- oriented courses in equity and bond markets.

The practice-oriented courses devised in modular patterns will deal with areas like equity, derivative, currency and professional practices in financial markets.

IGNOU's School of Management is launching the programmes in collaboration with Mumbai-based Financial Technologies, a release said today. — PTI

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BRIEFLY


Pakistani people line up to receive food donated by a welfare trust in Lahore
Pakistani people line up to receive food donated by a welfare trust in Lahore on Saturday. The government has blamed the country's economic woes on the fight against terrorism, but many ordinary people accuse the authorities of squandering aid money. The finance ministry said the annual cost of Pakistan's anti-terrorism military efforts rose 40 per cent to $8.5 billion in 2008 from 484 billion rupees a year earlier.
— AFP

BSE to name new CEO on Monday
Mumbai:
The board of the Bombay Stock Exchange met on Saturday to appoint a new CEO for the exchange but deferred the announcement till Monday. "We will announce the name of the new CEO on Monday," the BSE's chairman Jagdish Capoor told reporters here after the board meeting. — PTI

IFCI to raise Rs 700 cr
New Delhi:
Term finance lender IFCI, that aborted its stake sale process two years ago, is planning to raise up to Rs 700 crore from bonds during the current fiscal to meet its business growth plan. "We are planning to raise Rs 500-700 crore in the second quarter of 2009-10," IFCI CEO Atul K Rai said. — PTI

Fidelity stake in Satyam
Mumbai:
Foreign fund house Fidelity has reduced its stake in Satyam Computer to 4.02 per cent after offloading shares worth Rs 55.80 crore, through an open market transaction. Fidelity, through its various investment arms, offloaded 1.18 crore shares representing 1.76 per cent stake of Satyam Computer, the IT firm said. — PTI

TRAI chairman
New Delhi:
TDSAT member J S Sarma is learnt to have been appointed the new Chairman of the Telecom Regulatory Authority of India (TRAI). The order on Sarma's taking over charge as new TRAI chief was issued after the Appointment Committee of Cabinet cleared his name, said a senior official in DoT. — PTI

AI told to pay relief
New Delhi:
A day after an inquiry was ordered into a four-hour delay in Air India's Delhi-Patna flight, now fair trade regulator MRTPC has directed the state-owned air carrier to pay compensation for not following "standards of service" in its international flights. Passing the order, MRTPC has said that Air India failed to provide standards of service in its London-Delhi flight, which was cancelled due to heavy rains here. — PTI

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