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Volume 1, Issue 1
BFS62
28
th
June, 2013
Weekly
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Commodity Tax from July

Commodity transaction tax will be levied
effective July 1, 2013 on transactions involving
non-agricultural commodities traded on future
exchanges.

The levy will attract INR 10 on every INR
100,000 of business on the exchange by the
seller.

FLIPs View: This will help reduce speculation.
The objective is also to make it a level playing
field with equities where there is a Securities
Transaction Tax (STT).

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RBI relaxes norms for residential real
estate

RBI has reduced provisioning requirements and
risk weights for loans granted towards
residential real estate.

The move is aimed at boosting the sector by
reducing interest rate cost for the same.

FLIPs View: The objective here is to
segregate the risk associated with commercial
property and residential property, the latter
carrying lesser risk. This will also promote
lending to this sector by banks.

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Govt. may scrap SEZ policy

Govt. is planning to commission a study on
whether Special Economic Zones (SEZs) have
met the economic objectives; they have been
incorporated introduced for.

It also wants to evaluate whether the tax
incentives given to these are justified in the
light of increasing controversies and scams
around the SEZs.
The week that was. The week that was.
HDFC Ltd. is the leading company for housing
finance in India. It serves its customers across
the country through its extensive network of
331 offices.

Management Team at HDFC Ltd.

Mr. Deepak S. Parekh : Chairman
Ms. Renu Sud Karnad: Managing
Director
Mr. V. Srinivasa Rangan : Executive
Director
Mr. Keki.M.Mistry : Vice chairman and
Chief Executive Officer

Click here to read the article


Recruiter in Limelight:
HDFC

FLIPs View: The original intention while
creating SEZs was fantastic, and the rationale
was sound as well. To encourage exports, and
especially SMEs. But like everything else in
India, the benefits have accrued to the wrong
entities, and restricted mainly to IT and BPO
companies. Hence, I guess, it is about time
that this policy is reviewed.
---------------------------------------------------
RBI eases ECB norms for low-cost housing
projects

RBI has eased norms for low cost housing
projects, to raise funds overseas. It has
softened the eligibility conditions of a
developer/builder to raise funds under ECB
facility (Click on the link for details).

The move is aimed at providing push to low
cost housing market in India.

FLIPs View: The true benefits will be felt,if
the funds raised through these channels are
actually used for low cost housing projects.
Close monitoring will be required to prevent
diversion of funds.


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Did you know?

Its nature vs. banks in Uttarakhand!
Besides the tragic loss of human lives in Uttarakhand,there has been a
longer term impact due to the recent floods.
Banks in Uttarakhand region have been badly affected.
State Bank of India (SBI) has suffered a substantial loss as it has the
largest presence in the state (as compared to other banks) through its
subsidiary Nainital Bank.
All banks together have a total of 4,482 branches, of which 652 are in the four worst-
affected districts of the state.
Besides facing losses on the infrastructure side, banks are also foreseeing difficulties in
recovery of loans, as many people have lost properties in the calamity.
They also expect a fall in banking income due to a drop in tourism activities, which are not
expected to pick up for at least another few years.


Term of the Week
Special Economic Zone(SEZ)


.
Special Economic Zones (SEZs) is a frequently encountered term in business newspapers. Some
people think of it as a panacea to Indias economic problems.
Its been in the news recently, because of various controversies and regulatory changes around
it.




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Lets understand the concept behind SEZs.

What is a SEZ?

In simple terms, SEZ is a geographical region earmarked by the government, to produce
goods/deliver services, primarily for exports.

They are expected to earn foreign exchange and generate employment for the economy.
Governments offer various incentives (tax benefits, regulatory exemptions) etc. to industries,
who set up their units in these SEZs.

How are they doing in India?

India passed the SEZ Act in 2005. Since then,exports from SEZs have touched$88 billion in
2012-13.It means exports from SEZs accounted for 29 per cent of total exports in 2012-13.

As of March 31, 2013- SEZs had generated 1,074,904 jobs for the economy

Controversies and Scams

SEZ firm diverted gold into domestic market
Govt. may scrap SEZ policy

Off-late there has been a tussle over whether SEZs are meeting their economic objective.
There have been multiple instances where a particular unit is found misusing the facilities
extended to it under SEZ act.

Also, there have been a lot of legal disputes towards land acquisition for SEZs. Some of them are
often termed as real estate scams.

In the light of all this, government has initiated a study to evaluate whether the facilities
extended to SEZs are justified.

The road ahead:

SEZ model for economic growth has been validated in many countries. In fact China has
declared an entire province (Hainan) as SEZ.

We believe setting up a proper regulatory mechanism around SEZs, and involving more sectors
(other than IT and BPOs) should help in moving forward.