Midnight News – Jun 25th 2020

unnamed Midnight News – Jun 25th 2020

 

The central government has decided to give more time for filing income tax returns this year on account of the prolonged lockdown on account of COVID-19. The deadline for making eligible investments under Section 80C, Section 80D etc has been extended by one more month from June 30 to July 31. Even the last date for filing of returns pertaining to FY2018-19 has been extended by one month till end of July. As a result the deadline for linking of Aadhar Card with the Income Tax PAN has also been extended till the end of July. Tax returns for FY2019-20 have to be filed by November 30 this year.

The Dow and the NASDAQ suffered a sharp fall on opening on Wednesday after there were reports of a sudden spurt in Coronavirus cases. There are also fears that the US could see a second round of Coronavirus afflictions. The US is already the country with the largest number of COVID-19 afflictions and casualties. The broad US indices were down by nearly 2% and the first indications were already visible when the Dow futures started trading with deep cuts. In fact, the major reason for the Indian markets to correct so sharply in the second half was the tepid opening of the Dow Futures trading.

The International Monetary Fund has projected that India’s GDP would contract by 4.5% in calendar year 2020 due the severe lag effect of COVID-19. While the unlock 1.0 has been applied to business establishments across the non-containment zones, the lag effect in terms of availability of raw materials and labour is going to be significant. Initially, IMF had projected 1.9% growth in GDP for calendar 2020. Overall, the IMF has projected that global output would shrink by 4.9% while emerging markets output would shrink by 3%. India is ranked fourth in terms of COVID cases and lockdown could be extended.

Karur Vysya Bank reported a 39.5% rise in net profits at Rs.83.70 crore for the Mar-20 quarter. Despite the provisioning going up substantially, the profits were higher on account of other income. Provisions for bad debts and liabilities were up by 20% in the quarter at Rs.429 crore. Total income from operations was up by 3% at Rs.1803 crore. The gross NPAs of the bank remained at an elevated level of 8.68% even as the net NPAs tapered by nearly 100 bps to 3.98% indicating limited provisioning risk in the future. The bank reported an 11.5% growth in net profits for the full financial year FY20.

As digital lending via apps has been picking up, RBI has moved in to force stricter compliance liability on these digital banks. To begin with, RBI has made the banks and NBFCs direclty accountable for the digital apps they tie up with. RBI has also outlined list of measures that such digital platforms and the originators need to follow. The names of digital lending platforms hired by the bank or NBFC will have to be disclosed. All loans need a sanction letter on the letterhead of the bank or the NBFC. Post sanction, the copy of the agreement will also have to be sent to the borrower. In the last few years a number of such digital apps have mushroomed that are also giving instant credit to consumers. RBI has also objected to usurious interest rates charged by such platforms as well as strong-arm recovery tactics.

Bank of Singapore and a clutch of PE investors including Blackstone and KKR may be all set to bid for Edelweiss Global Investment Advisors. The investment advisory business is valued at close to $100 billion and they are looking to monetize up to 20% stake in the business. A stake sale at this juncture will be useful to Edelweiss to battle rising bad loans and liquidity challenges in the ARC business. At present the PE funds are in the process of due diligence of the books. Edelweiss Global has assets under advice of Rs.1.11 trillion while the Edelweiss AMC has an AUM of Rs.25,000 crore.

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