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    December 30, 2011
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    Treasury bill auction schedule announced with proposed weekly allotments and flexibility to adjust timing and amounts.
    Notification of a quarterly auction calendar for Treasury Bill auctions specifying proposed weekly allotments by 91 day, 182 day and 364 day tenors and aggregate issuance totals for the quarter ending March 31, 2012. The Government and Reserve Bank retain flexibility to modify notified amounts and timing in response to cash management needs and market conditions; changes will be communicated by press release. Auctions are subject to the terms of the General Notification No. F2(12)-W&M/97, as amended.
    December 30, 2011
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    Issuance calendar for government dated securities revised, reallocating weekly auctions and expanding borrowing with retail non-competitive access.
    Revision of the Government issuance calendar for January-March 2012 reallocates weekly auctions across specified maturities and increases planned gross market borrowings after consultation with the Reserve Bank. All auctions include the non-competitive bidding scheme, reserving five percent of the notified amount for specified retail investors, and the Government and Reserve Bank retain flexibility to modify amounts, periods, maturities, and instrument types with due notice.
    December 30, 2011
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    External debt growth driven by commercial borrowings raises currency risk and increases short-term debt exposure relative to reserves.
    India's external debt rose to US$ 326.6 billion at end-September 2011, driven mainly by increases in external commercial borrowings, export credits and short-term debt. Short-term debt accounted for 21.9% of total external debt while external commercial borrowings were the largest component, followed by NRI deposits and multilateral debt. The currency mix was dominated by the US dollar, and the rise in commercial borrowings heightens currency risk because rupee depreciation raises rupee-denominated debt service for corporate borrowers. Foreign exchange reserves provided substantial but slightly reduced coverage of total external debt, and the share of concessional debt declined.
    December 27, 2011
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    Fiscal consolidation and adherence to expenditure ceilings to stabilise growth while prioritising agricultural credit and rural investment.
    The Government describes the slowdown as temporary and mandates Ministries to adhere to expenditure ceilings and pursue fiscal consolidation while implementing safeguards against fund misuse. Policy priorities include expanding agricultural credit, direct cash subsidy transfers, incentives for indigenous crop production, promotion of rural agrarian industries to reduce migration, and mechanisms to attract FDI in agriculture with state coordination; priority investment sectors identified are power, civil aviation, health, infrastructure and telecom.
    December 23, 2011
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    Tax enforcement is targeted and based on credible intelligence, with intrusive searches used only when justified by verification.
    Tax enforcement activity under the Income Tax Act is targeted and based on specific credible information and prior verification rather than indiscriminate action. The Department employs information technology tools to select cases unobtrusively and to verify intelligence before intrusive measures; search and seizure and survey operations therefore respond to detected tax evasion and significant undeclared income.
    December 20, 2011
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    Priority sector lending targets require banks to allocate defined credit shares to agriculture and rural borrowers under RBI guidelines.
    Priority sector lending requires domestic scheduled commercial banks to meet overall and agriculture sub-targets measured against ANBC or credit equivalent of off-balance-sheet exposures as of the prior March 31. To improve agricultural credit access, the Government operates an Interest Subvention Scheme with additional incentive for prompt repayment, implemented a debt waiver and relief scheme, dispensed with "no dues" certificates for small agricultural loans in favour of self-declaration, advised waiver of margin/security up to a stated loan threshold, and authorised branch expansion into unbanked rural centres with reporting and ABEP guidance.
    December 20, 2011
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    Cap on lending rates to microfinance institutions limits margins and interest and mandates no penalties or security deposits.
    RBI guidance conditions the grant of priority sector advances status to bank loans to microfinance institutions on meeting asset composition and lending for income generation thresholds and compliance with pricing guidelines; it imposes a lender margin cap and an interest rate ceiling on individual microloans and disallows penalties for delayed payment and security deposits from borrowers.
    December 19, 2011
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    Financial inclusion: accelerate banking coverage and electronic benefit transfers to expand formal credit and social payments.
    The address prescribes strengthening financial infrastructure in Southern States/UTs by accelerating agriculture credit via widespread issuance of Kisan Credit Cards and concessional short term loans, expanding MSE and micro enterprise financing through cluster specific schemes, and promoting education, minority, weaker sections and housing credit. It mandates completion of financial inclusion under Swabhiman, migration of RRBs to core banking and NEFT, expansion of branch and insurance coverage, adoption of mandatory e payment for state transactions, and expedited state review of pending project approvals to reduce asset quality risks.
    December 17, 2011
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    Indigenization of currency production reduces dependence on foreign suppliers and strengthens note security through modernization and procurement reform.
    The speech describes SPMCIL's corporatization with employee transfer arrangements and pension trust operationalization; a multi year modernization and indigenization plan including new bank note paper lines and ink production to reduce dependence on foreign suppliers; and adoption of transparent procurement and competitive processes for security features alongside strengthened enforcement and R&D to combat counterfeit currency.
    December 16, 2011
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    Development cooperation funding to continue, supporting grant assistance and private investment pilots in low-income states.
    DFID will maintain its development cooperation programme in India at the agreed annual funding level for the next four years to support poverty reduction and promote inclusive growth in alignment with national priorities and the Millennium Development Goals, including continued grant assistance for selected Centrally Sponsored Schemes and projects in Bihar, Madhya Pradesh and Odisha.
    December 16, 2011
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    Universal health coverage recommends integrating insurance schemes with financing, access, workforce and service-norm reforms.
    The Universal Health Insurance Scheme and the Rashtriya Swasthya Bima Yojana provide subsidised insurance coverage for BPL families and selected unorganised sector workers; a High Level Expert Group on Universal Health Coverage recommended reforms on health financing, access to medicines, human resources, service norms, governance, community engagement and social determinants, and the Government approved these recommendations for inclusion in the Twelfth Five Year Plan.
    December 16, 2011
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    Fake currency detection prompts coordinated agency roles and upgraded currency security measures to combat circulation.
    Detection of counterfeit notes by the banking system and by RBI across two reporting periods prompted a multilayered institutional response: CBI as the nodal agency for State coordination, DRI as Lead Intelligence Agency for smuggled counterfeit notes, and a special FICN Co-ordination Group in the Ministry of Home Affairs for intelligence sharing. NIA is empowered to investigate and prosecute such offences and hosts a Terror Funding and Fake Currency Cell. RBI is upgrading security features of high-value notes and strengthening bank detection mechanisms.
    December 16, 2011
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    CRA designation: regulatory selection of NSDL as Central Recordkeeping Agency despite prior SEBI enforcement proceedings.
    Designation of NSDL as Central Recordkeeping Agency for NPS followed a competitive selection process requiring specified minimum tenure, positive net worth, and large-scale account-management experience; NSDL was selected after evaluation. The record notes prior SEBI enforcement actions against NSDL-interim, disgorgement and adjudication orders-which were subsequently stayed, set aside, revisited by a SEBI-appointed Committee and the SEBI Board, and remain the subject of appeals or further consideration.
    December 16, 2011
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    Counterfeit currency coordination: interagency framework designates CBI nodal and NIA empowered to investigate and prosecute.
    RBI reported complaints of counterfeit currency notes dispensed through ATMs which were investigated and disposed. Multiple agencies coordinate FICN response: CBI is the nodal agency for State coordination, DRI is the Lead Intelligence Agency for smuggled FICNs, an MHA FICN Coordination Group facilitates intelligence-sharing, and the NIA is empowered to investigate and prosecute FICN offences with a dedicated Terror Funding and Fake Currency Cell.
    December 16, 2011
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    Non-investment of pension contributions: amounts credited to public account and interest provided pending regulator operationalisation.
    Amounts collected from Government employees under the New Pension System were credited to the Public Account because the interim regulator could not operationalise the institutional architecture to invest those contributions; consequently the contributions were not invested and the Government paid interest at 8% p.a. while the regulator established required arrangements.
    December 16, 2011
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    Vigilance and anti-corruption oversight prompts inquiries and disciplinary action against senior bank officials for alleged malpractices.
    Institutional vigilance and anti-corruption mechanisms govern complaints and investigative action against senior bank officials, with responsibility shared among administrative vigilance divisions, the Central Bureau of Investigation, vigilance units in banks and departments, disciplinary authorities, and the Central Vigilance Commission; RBI and the Cabinet Secretariat also examine board-level complaints. Complaints alleging corrupt credit sanctioning, write-offs, improper takeovers, abuse of position, and disproportionate assets are triaged by CVOs or verified by central agencies, and RBI issues circulars mandating fraud reporting and internal-control strengthening.
    December 16, 2011
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    Loan restructuring guidelines enable conversion and rescheduling of agricultural loans to provide relief and fresh credit to affected farmers.
    Standing guidelines allow banks to restructure agricultural credit after calamities by converting outstanding principal and accrued interest into term loans; rescheduling loans and accrued interest for three-to-ten year periods based on crop failure severity; providing fresh crop and consumption loans; treating restructured loans as current dues; prohibiting compounding of interest on restructured accounts; permitting relaxed security and margin norms; and allowing at least a one-year moratorium during restructuring.
    December 16, 2011
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    Interest subvention scheme for women self help group members proposed to mirror agricultural loan subvention, plus a dedicated development fund.
    The Andhra Pradesh proposal sought an interest subvention scheme for Women Self Help Group members modelled on the central interest subvention for short term crop loans to farmers, which is confined to one year agricultural loans to boost production; the Union Budget also proposed a Women SHG's Development Fund to support women SHGs.
    December 16, 2011
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    Policy portability enables health insurance holders to switch insurers at renewal without losing waiting period credits.
    IRDA guidelines permit health insurance policyholders, at renewal, to move between insurers for a similar product or between plans within the same insurer without losing accrued credits such as waiting period completions and time bound exclusions; a portability portal and data transfer mechanism support implementation and industry consultations informed the measure.
    December 16, 2011
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    Exchange of information updated to international standards enabling broader tax cooperation and assistance in revenue collection.
    The Protocol updates the India-Australia DTAA by revising the Exchange of Information to international standards including bank information and exchange without domestic tax interest, allows information to be shared with other law enforcement agencies with competent authority authorisation, provides mutual assistance in collection of revenue claims enabling recovery of assets or moneys under prescribed procedures, introduces a non discrimination clause for nationals, and rationalises thresholds for service, exploration and equipment permanent establishments to encourage cross border movement of capital and services.

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      Text of the Address by the Union Finance Minister in the Meeting with Chief Ministers of South Zone States/UTs and CEOs of PSBs/FIs on 18th December, 2011 at Bengaluru.

      December 19, 2011

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      Press Information Bureau

      Government of India

      Ministry of Finance

      18-December-2011 16:29 IST

      Text of the Address by the Union Finance Minister in the Meeting with Chief Ministers of South Zone States/UTs and CEOs of PSBs/FIs on 18th December, 2011 at Bengaluru

      1. Hon’ble Chief Ministers and Lieutenant Governors; Deputy Governor, RBI; Chairman, PFRDA; Chairman, LIC; CMDs of Public Sector Banks; and Chief Executives of NABARD, SIDBI, NHB, IIFCL and IBA and the representatives of Central and State Governments.

      2. First of all, let me welcome to all of you present here today to the Zonal Review Meeting of the South Zone States/UTs being held at Bengaluru. We have here today a diversified mix of Southern states/UTs consisting of Andhra Pradesh, Karnataka, Kerala, Tamil Nadu, Puducherry, Andaman & Nicobar Islands and Lakshadweep. All the Southern States/UTs are well endowed with natural resources and have great potential for growth. All of which have unique and special features.

      3. From the banking perspective, we have a mix of States with varying level of access to banking facilities, flow of credit to priority sectors and over all C-D ratio. State Governments and the bankers are working in close coordination to tap the potential of each State/Union Territory and promoting credit flow into various growth areas. States with a high level of co-operation with Banks have done well in availing their banking services. It will, indeed, be a great learning process to share each other’s experience and formulate appropriate strategy to approach state specific problems. Nonetheless, I would like to highlight a few issues relating to flow of credit and some other related issues.

      4. The target of agriculture credit flow is an important item on our agenda today. This is a critical item reviewed in the SLBCs, as well. For the current financial year, the target for agriculture credit flow has been fixed at Rs. 4,75,000 crore against which the banking system has already extended credit of Rs. 2,23,380 crore as on 30th Sept, 2011. Kisan Credit Cards are the prime vehicle for the flow of agricultural credit. As on 31st May, 2011, the banking system have issued 10.42 crore KCCs. During 2011-12 (April to May 2011), 4.09 lakh KCCs were issued by Commercial Banks, cooperative Banks and Regional Rural Banks with a loan amount of Rs.2,616 crore. Banks have been advised to issue Kisan Credit Cards to all eligible farmers. I request the State Governments to take this task on a campaign basis so that Kisan Credit Cards are issued to all eligible farmers. During the year 2011-12, short term crop loans is available at an attractive interest rate of 4 per cent per annum for prompt repaying farmers. It must be ensured that no eligible farmer is left out from availing this facility. States should make efforts to generate awareness regarding the Scheme so that the farmers can avail credit at cheaper rates.

      5. In terms of employment generation, Micro and Small Enterprises (MSE) is next only to agriculture. This sector also plays a crucial role in furthering the objective of equitable and inclusive growth. Overall flow of credit to MSE sector has been satisfying. The outstanding MSE credit from PSBs by the end of March 2011 increased by 36.3 per cent as against the target of 20 per cent growth. I am happy to note that all the States under review, except Andhra Pradesh, have attained the target of 20 per cent credit to MSEs. As regards, the target of 50 per cent credit flow to micro enterprises within the MSE Sector, all the States under review have achieved the stipulated target except for the states of Andhra Pradesh and Tamil Nadu. I would like to advise the State Governments to devise suitable schemes in cluster/ location specific industry groups for improved credit flow.

      6. Public sector banks have played a pivotal role in extending education loans to the needy students. The total outstanding amount of educational loans of public sector banks has more than tripled during the period from March, 2007 to March, 2011 in the country as well as in South Zone. Similarly, the number of accounts outstanding has more than doubled in the country. Performance of South Zone has kept pace with the all India growth, though the state of Andhra Pradesh, Karnataka and Kerala need to put extra effort. State Governments need to popularise Model Educational Loan Scheme of Indian Banks’ Association, which has recently been revised. Similarly, the banks should also ensure time bound disposal of the applications.

      7. Outstanding credit to minority communities on all India basis registered a growth of nearly 150 per cent during the last three years ending March, 2011. In South Zone the total credit outstanding increased by 1.5 times during the same period. Growth of credit to Minority communities in south zone has been on a similar pace though some of the states /UT need to step up efforts. I am also happy to note that the public sector banks have achieved the targeted level of 10 per cent of adjusted Net Bank Credit under weaker sections category of Priority Sector in March, 2010. I would ask banks to pay special attention to monitoring the credit flow to weaker sections and ensure meeting their targets, in future too.

      8. We have taken up an ambitious plan ‘Swabhiman’ for Financial Inclusion. We have set a target for coverage of 73000 habitations of the country with banking facilities by the year 2012. By the end of November, 2011, on all India basis over 46000 villages have been covered which is around 63 per cent of the target. In the States represented here today, I find that out of 14,612 villages allotted to South Zone for provision of banking services, nearly 11,114 villages have been covered by the end of October 2011, which comes to about 76 per cent of the target. Therefore, the rest of the villages representing nearly 24 per cent of the target need to be covered in the next three months. This in turn will require quite a bit of efforts on the part of state Governments and banks.

      9. Growth in housing loans in the State of Karnataka shows a remarkable performance of 85 per cent during 2010-11. So far as the State of Andhra Pradesh and UT of Lakshadweep concerned, these are 15.17 and 17.72 per cent, respectively. Tamil Nadu with 8.71 per cent growth in housing loan need to step up efforts. To further stimulate growth in housing sector, in my budge speech, I have liberalized the existing scheme of interest subvention of 1 per cent on housing loans by extending it to housing loan upto Rs.15 lakh where the cost of the house does not exceed Rs.25 lakh. States should popularize the scheme among the targeted beneficiaries. I request all south zone States/UTs to focus on the growth of Housing Loans as there is considerable scope in this sector.

      10. With regard to the Credit Deposit (CD) Ratio, I am happy to note that Tamil Nadu, Andhra Pradesh, Karnataka and Kerala have shown an impressive growth of 117.2 per cent, 114.9 per cent, 74.6 per cent and 75.9 per cent respectively. CD ratios in relation to States of Puducherry, Andaman & Nicobar and Lakshadweep is less than the 60 per cent benchmark. I request, particularly, the Lieutenant Governors of Andaman & Nicobar and Lakshadweep to use the forum of SLBC meetings effectively and take pro-active action to ensure that the CD Ratio in their UTs is improved.

      11. Regional Rural Banks (RRBs) are playing an increasingly important role in the growth of rural economy. I am happy to note that all the 16 RRBs functioning in the South Zone States have migrated to CBS. I am also happy to note that all the RRBs functioning in the South Zone States/UTs are participating in the NEFT system through their sponsor bank except one. These institutions will soon be a part of National Electronic Funds Transfer (NEFT). With this, all the RRBs in the country will be in a position to provide facility to their customers to remit funds across the country and avail all the value added services.

      12. We have been encouraging expansion of RRBs in terms of opening new Branches. 276 branches of RRBs will be opened by March 2012 and 325 branches will be opened by March, 2013 in the Southern Region. I request the State Governments to extend their full supports for expansion of branch network of RRBs.

      13. Apart from expansion of banking facilities in rural areas there is also a need for improving insurance penetration in rural areas. I notice that 18 out of the 156 Districts of the 7 States/UTs being reviewed today do not have any Branch of LIC and likewise, 4 Districts do have branches of non-life Insurance companies. I am instructing LIC and Non-life Insurance Companies to ensure that all Districts must have at least one Branch or a satellite office in these districts during the coming year. We have been popularizing insurance coverage of rural poor through various schemes as a part of Financial Inclusion. Aam Admi Bima Yojana (AABY) and Janashree Bima Yojana (JBY) are important insurance schemes of the Government of India meant to support the rural landless households, rural and urban poor and informal sector workers and their families. The coverage under these insurance schemes needs to be improved.

      14. Government has introduced a co-contributory voluntary pension scheme – “Swavalamban” with effect from September 2010, for the benefit of poorer section of the society, under which Central Government contributes Rs. 1000 per account per annum for an annual minimum saving of Rs. 1000 and up to Rs, 12000 per annum. The coverage so far, at the all India level, is about 3.65 lakhs under the scheme. The State Governments should take benefit under the scheme and should bring all the workers in the unorganised sector under the ambit of Swavalamban Scheme.

      15. The Banking Sector, in general, and the Public Sector Banks, in particular have sanctioned significant amount of loans for large projects. In a number of projects, the implementation is held up because of approvals pending at the Central/ State levels. Inordinate delay in grant of approvals results in cost and time overrun and thereby endangering the viability of the project itself. The risk of the loans sanctioned/ disbursed by the Banks turning into Non-Performing Assets is also significantly enhanced. I have, on October 18, 2011 and November 18, 2011 reviewed the status of pending approvals with the concerned Ministers with a view to expedite such approvals. It has come to my notice that in the Southern Region, fourteen projects with a total investment of Rs.39,424 crore are pending for want of various approvals. I would request the Chief Ministers to pay personal attention to this aspect and review the status of approvals in large projects in their States. CMDs of the PSBs have been advised to approach the State Governments for expediting the approvals in projects financed by them.

      16. E-payment is another area where I would seek the cooperation of the Chief Ministers and Administrators. As you are aware, Public Sector Banks are almost completely on the core banking platform. All the RRBs, barring a few, have also rolled out CBS and will soon be a part of NEFT. Since the required system for paperless transmission of funds is in place, the States should introduce mandatory e-payment for its various transactions such as payment to its employees, contractors, etc. There are large number of schemes both by the Central and State Governments where cash benefits are transferred to the beneficiaries. Under the financial inclusion plan under implementation, banking services are expanding rapidly. I would urge the Chief Ministers and Lieutenant Governors to shift to electronic benefit transfer in all villages which have been covered with banking services in a time bound manner.

      17. The presence of Currency Chests and Clearing Houses has been reviewed to ensure that at least one Currency Chest and one Clearing House is there in each District of the Country. I am happy to note that all the Districts in the Southern States have at least one Currency Chest and one Clearing House. In Andaman & Nicobar Islands, State Bank of India has put in place adequate arrangements for inter-bank settlements. Since there are less than three bank branches, establishing a Clearing House is not considered feasible as per RBI guidelines. In Andaman & Nicobar Islands, adequate Currency Chest arrangements are available.

      18. To conclude, the Southern States/UTs have immense potential. The need, therefore, is to identify the opportunities and recognize the challenges to work towards a sustainable and inclusive growth of the region supported with greater penetration of the formal financial sector.

      19. I once again thank all of you for your presence today and look forward to your active participation in the meeting.

      ******

      DSM

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