India’s leading Bombay Stock Exchange (BSE), witnessed an over two-fold jump to Rs. 14.40 lakh crore in July. Indian market regulator Securities and Exchange Board of India (Sebi) said in its monthly report that the monthly turnover in equity derivative segment of BSE increased by 113.8 per cent from Rs. 6,73,225 crore in June 2013 to Rs. 14,39,535 crore in July […]
Posts Tagged ‘Sebi’
Security exchange board of India said any entity acquiring control of a listed Indian company would need to make an open offer for public shareholders. The open offer for minority shareholders would need to be made even if the ‘control’ has been acquired without crossing the threshold shareholding limit (25 per cent), Sebi chairman U. […]
Sebi proposed to ring fence clients’ money and collaterals from such risks through steps like greater Internet-based trades and faster settlements. The proposed move, which was issued today by Sebi as a ‘discussion paper’ inviting public comments, might also have a bearing on sale of pledged shares by large brokers or financiers which often leads […]
Indian mutual fund industry witnessed an increase of about Rs two trillion this year, with this its assets base seen nearing Rs 8 trillion. The total industry AUM stood at Rs 6.11 lakh crore at the end of 2011. The industry is hopeful of even better days ahead in 2013. Industry expects net inflow into […]
Private Listed companies whose promoters have kept with them the stakeholdng of more than 75 per cent may face tight situation as the regulatory body of India, Sebi is mulling options including monetary penalties and eventual delisting of non-compliant entities. Private sector listed companies have 7 more months to bring down their respective promoter […]
Market watchdog Sebi has asked the government to frame a strong central legislation to tackle the menace of companies collecting large amount of money from the public without requisite regulatory approvals and for dubious investment projects. Stating the existing legal provisions are weak and allow such companies to benefit from certain loopholes in the regulatory […]
Over 1,500 Indian companies raised a whopping Rs 2.39 lakh crore through private placement of debt securities or bonds in the first eight months of the year. This represents a jump of 59 per cent from Rs 1.50 lakh crore raised in the year-ago period, data from Sebi shows. In debt private placements, firms issue […]
The advertisements and tall claims has put the online survey company, Speak Asia, under the government scanner. The company has so far collected around Rs.800 crore from over million people assuring them that they will earn four folds of their investments in a year’s time. Speak Asia website says that it has a presences in […]
According to the report in Financial Express, all non-retail investors will have to use the Application Supported By Blocked Amount (ASBA) facility – where money is debited from investor’s account only after share allotment – the date being from May 2 to apply for share sale offers in the capital market, Sebi said today. Under […]
The total investment by the foreign institutional investors (FIIs) in Indian market, which includes investments in equities, the debt market, stocks and bonds. The total investment by FIIs since 2011 till date is Rs. 5614.30 cr. In dollar terms, net FII inflows amount to about $1.25 billion in 2011 so far. As reported in PTI, […]
RBI, Sebi to keep watch on illicit Swiss money returning home PTI reports that country’s apex bank and Financial regulators Sebi have enhanced vigil on Indian entities routing their funds from secretly-held Swiss bank accounts to India through Dubai and other locations, on fears of getting exposed for stashing the money in the European nation. […]
It is reported in Financial Express that NSE had recorded PAT of Rs 614 crore for FY10, while BSE saw a net profit of Rs 213 crore. With a net profit margin at upwards of 40%, Indian exchanges are on the top compared to global peers. But the proposal to put a cap on the […]
The regulator has also proposed to the government that the securities transaction tax, or STT, which is levied on buying or selling of stocks and on derivatives trade, should be cut by one-third and that a uniform stamp duty be levied and collected by a central agency.
These proposals have been forwarded to the finance ministry, in the run-up to the Budget, said a person with the knowledge of the proposal. The letter to the finance ministry says, “Tax benefits to corporates investing in schemes of mutual funds may be withdrawn.”
It is not just the capital markets watchdog that is uncomfortable with MF industry’s unhealthy dependence on short-term funds from corporates.
Though this helps fund houses grow their assets and boost valuations, policymakers are worried about the systemic implications of any swift outflow of such institutional funds that could hobble some of the fund houses. This was evident during the second-half of 2008, when the Reserve Bank of India (RBI) had to keep liquidity support open to help MFs meet their redemption obligations.
RBI has also been unhappy at the way banks have been parking their surplus with MFs, which in turn finds its way back to banks. The central bank has nudged banks to restrict their investments in MFs.
Any move, either to do away with the tax benefits or to tweak the tax rates, could hurt the local MF industry whose growth is linked to the flow of funds from corporates. Over 50% of the money that Indian MFs attract for their debt schemes comes from corporate treasuries and banks. According to latest data, the assets under management of the Indian MF industry are a little under Rs 7-lakh crore.
SEBI’s proposal is aimed at putting an end to the rampant misuse of debt schemes of MFs by corporates, who park short-term corporate treasury funds to enjoy a tax arbitrage. While income from their treasury operations attract the corporate tax rate of 33.99% (including surcharge and education cess), treasury investments in debt funds attract a dividend distribution tax (DDT) of only 22.66%.
“If the tax benefit is removed, it will discourage corporates from using mutual funds as a treasury instrument… as we want to develop mutual funds as a vehicle for retail investors to take exposure in the securities market,” said a SEBI official.
Recently, RBI had told banks to go slow on their MF investments. In the last fortnight of December 2009, banks withdrew more than Rs 1-lakh crore from MFs. RBI deputy governor Shyamala Gopinath too had expressed her concerns about tax arbitrage through mutual fund investments.
“Mutual funds’ fixed-income products enjoy certain tax exemptions not available to banks. But this is outside the regulatory purview. However, if these policies introduce any vulnerability in the financial system, there is a need to address this through appropriate macroprudential and microprudential regulations,” Ms Gopinath said at a Fixed Income and Money Market Dealers Association (FIMMDA) meet.
SEBI has also asked the government to drastically reduce the securities transaction tax (STT) on equity transactions, as it increases the transaction cost. The regulator has recommended that STT should be slashed by one-third, as the rate has effectively tripled with the withdrawal of STT as a rebate under Section 88E in the last Budget.
Besides proposing a uniform stamp duty that will levied and collected by a central agency and shared among states based on an agreed formula, SEBI has recommended a goods and services tax (GST)-type concept for stamp duty collection on securities trades.
Market players say that there are several anomalies in the stamp duty, as it is levied by states with each levying different rates for different securities instruments. There are also disputes among states. Transaction costs in India are one of the highest in the world, with government levies, such as stamp duty and STT, accounting for almost 75% of the cost.
SEBI also wants Indian Depository Receipts(IDRs), instruments through which Indian investors can invest in equity shares of foreign companies, to be treated as securities for tax purposes. It has also recommend to the government that IDRs should not be taxed on transfer.