Daily Financial News Analysis – 28th Dec’19

Table of Contents

Start Ups

India has a considerably large startup ecosystem.
The proposal to further simplify the regulatory regime for startups is most welcome.
The promise to create a tax compliance regime that would permit a startup to not spend more than an hour a month on tax matters sounds most appealing.
Ensuring that the regulatory regime is conducive to innovation.
The government has already put in place self-certification and other measures to ease compliance.
However, there is no proposal that has been reported to scrap the angel tax on startup capital.
Retaining angel tax & giving power to tax department to decide on exemption is like control raj.
A simpler regime must not become synonymous with a lax regime, nor with dilution of labour protection, security and safety, and environmental norms.
It must ensure that businesses have access to space to operate — this requires reasonable rents and stability of tenancy.
This will mean creating functional markets in land and rental spaces.
Access to stable power supply calls for ending the ills of the power sector.
Easier starting up calls for systemic reform, for everyone.

India’s slowing economy could cause gross bad loans in the financial system to rise again.
The slowdown could cause the gross non-performing ratio of local lenders to increase to 9.9% in September 2020 from 9.3% in September 2019.
Credit growth remained subdued at 8.7% until September 2019.
State-owned banks’ performance needs to improve.
Private sector banking space, the central bank observed, also needs to focus on aspects of corporate governance.
The performance of scheduled urban cooperative banks (SUCBs) deteriorated significantly between March and September 2019.

SBI will be introducing one time password (OTP) based cash withdrawal system to help protect its customers from unauthorised transactions at ATMs.
The OTP-based cash withdrawal system shall be active across all SBI ATMs effective 1 January 2020 between 8 pm to 8 am.
Applicable for transactions above ₹10,000.

State-owned Life Insurance Corporation on Friday paid a dividend of ₹2,610.74 crore to the government for financial year 2018-19.
During the Financial Year 2018-2019, LIC generated a valuation surplus of ₹53,214.41 crore, registering a growth of 9.9% over the previous year.
30|11|2019: It has a market share of 76.28% in number of policies and 71% in First year Premium.
This is for the first time in LIC’s history that Valuation surplus has crossed ₹50,000 crore.
LIC Chairman M R Kumar handed over the cheque to Finance Minister Nirmala Sitharaman in presence of Finance Secretary Rajiv Kumar and Special Secretary Debasish Panda.
LIC has completed 63 years since its incorporation and now manages assets worth more than ₹31.11 lakh crore.
It had annual income of ₹5.61 lakh crore and achieved the highest ever First Year Premium Income of ₹1,42,191.69 crore in 2018-19.
During 2018-19, it has paid 2.59 crore claims for an amount of ₹1.63 lakh crore.

CSC e-Governance Services India Ltd, a special purpose vehicle under Meity.
It restarted Aadhaar registration and other related works which it plans to expand across the country next week.
Aadhaar enrolment work at CSCs in rural areas was stopped around two years back following complaints of data leakage and non compliance with security standards set by the UIDAI.
There are around 3.6 lakh CSCs in the country that provide government services online to people in rural areas and small towns.
The restart of unique ID registration work coincides with Aadhaar project crossing the 125-crore mark.
This means that over 1.25 billion Indians have the 12-digit unique identity number.
Aadhaar is now being used as the primary identity document.
Aadhaar-based authentication services have been used close to 37,000 crore times since inception.
At present UIDAI receives about 3 crore authentication requests every day.

The government has notified changes to the goods and services tax (GST) rules.

lowering the input tax credit to 10% from 20% of eligible credit, if invoices or debit notes are not reflected in filings.

It has also permitted officers at the level of commissioners to bar debit of input tax credit for one year in case of credit being availed fraudulently.
The GST Council had approved a proposal in this regard at its meeting on December 18 to check tax evasion and menace of fake invoicing.
The new rules will come into effect from January 1, 2020.
The commissioner having reasons to believe that credit of input tax has been fraudulently availed may not allow debit for discharge of any liability or for claim of any refund of any unutilised amount.
The Centre further notified that e-way bill of taxpayers who have not filed their Form GSTR-1 for two months or two quarters shall be blocked.
The government has also allowed waiver of late fee for entities furnishing outward supply details in Form GSTR-1 between December 19, 2019 and January 10, 2020, for the period between July 2017 and November 2019.