ISSUE: 720 2024 31 December 2024
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Real GDP growth to recover in Q3, Q4 of
FY25, says RBI’s report: The real Gross
Domestic Product (GDP) growth is expected to
recover in the third and fourth quarter of the
current financial year on back of pick up in
domestic drivers, mainly public consumption and
investment, strong service exports and easy
financial conditions, the Reserve Bank of India’s (RBI) Financial Stability
Report said. “Despite this recent deceleration, structural growth drivers
remain intact. Real GDP growth is expected to recover in Q3 and Q4 of
2024-25,” the report said. During H1:2024-25, real GDP growth (y-o-y)
moderated to 6.0 percent from 8.2 percent and 8.1 percent growth
recorded during H1 and H2 of 2023-24, respectively. India’s GDP growth
slumped to its lowest level in seven quarters at 5.4 percent in the second
quarter of FY25.
(Moneycontrol)
Centre’s fiscal deficit in FY25 may be a tad lower than the
budgeted 4.9% of GDP: Amidst challenging economic conditions, the
Centre is likely to have some cheer on its fiscal management with its fiscal
deficit seen to be a tad better than the budgeted 4.9% of GDP for the
current fiscal year 2024-25. This is also likely to help the Centre keep its
fiscal deficit target for 2025-26 at an ambitious 4.3%.According to
sources, tax collections, particularly of the goods and services tax, have
been doing well in the current fiscal while direct tax collections have also
been robust, despite a slight slowdown in the corporate tax mop-up. It is
expected that at least income tax collections could exceed the Budgeted
target of Rs 11.87 lakh crore for the fiscal.
(Business Today)
India's BoP strengthened by robust inflows from NRI deposits,
external commercial borrowing in last quarter: Report: India's
Balance of Payments (BoP) saw a significant improvement in the second
quarter driven by strong inflows from Foreign Portfolio Investments
(FPIs), External Commercial Borrowings (ECBs), and Non-Resident
Indian (NRI) deposits, according to a report by Bank of Baroda. The
report highlighted a notable increase in the capital account surplus, which
rose to $11.9 billion in Q2 FY25 from $10.3 billion in Q2 FY24. It said
"India's balance of payments recorded an accretion of $18.6 bn in Q2
FY25, compared with $2.5 bn in Q2 FY24. This was supported by robust
inflows from FPIs, ECBs and NRI deposits".
(Business Line)
External debt rises to $711.8 billion as of Sep, 4.3% up from
June: FinMin: India's external debt rose to $ 711.8 billion as of
September this year, up 4.3 per cent over June 2024, as per the data
released by the Finance Ministry. At the end of September 2023, the
external debt stood at $ 637.1 billion. In September 2024, India's external
debt was placed at $711.8 billion, recording an increase of $29.6 billion
over its level at June-end 2024, India's Quarterly External Debt Report
said. The external debt to GDP ratio stood at 19.4 per cent in September
2024 against 18.8 per cent as of June 2024, it added.
(Business Standard)
Introduction of beneficiary bank account
name look-up facility for RTGS and NEFT
Systems: To ensure that remitters using RTGS and
NEFT systems can verify the name of the bank
account to which money is being transferred before
initiating the transfer and thereby avoid mistakes
and prevent frauds, a solution for fetching the
beneficiary’s name is being implemented. Based on the account number
and IFSC of the beneficiary entered by the remitter, the facility will fetch
the beneficiary’s account name from the bank’s Core Banking Solution
(CBS). This facility shall be made available to remitters through Internet
banking, Mobile banking and also be available to remitters visiting
branches for making transactions. All banks who are direct members or
sub members of RTGS and NEFT are advised to offer this facility no later
than April 1, 2025.
(RBI Press Release)
RBI Governor Sanjay Malhotra projects bright economic
outlook for 2025 amid criticism: After facing criticism for
prioritising inflation control over economic growth, the Reserve Bank of
India’s (RBI) new Governor, Sanjay Malhotra, expressed optimism about
India’s economic prospects for 2025. In his foreword to the Financial
Stability Report released on Monday, Malhotra highlighted robust
consumer and business confidence as pivotal drivers of the country’s
economic progress. “Consumer and business confidence for the year
ahead remain high and the investment scenario is brighter as
corporations step into 2025 with robust balance sheets and high
profitability,” said Malhotra who took over as 26th Governor earlier this
month, as PTI reported.
(Financial Express)
Gross NPAs of banks decline to 12-year low of 2.6%: RBI report:
The Reserve Bank on Monday said asset quality of banks improved
further and their gross non-performing assets (GNPA) or bad loans ratio
declined to a 12-year low of 2.6 per cent in September 2024 on the back of
falling slippages and steady credit demand. The RBI also flagged concern
over a sharp rise in write-offs, especially among private sector banks
(PVBs), which could be partly masking worsening asset quality in
unsecured lending segment and dilution in underwriting standards.
(Economic Times)
Private banks outrun public sector peers in priority lending
benchmarks: For the first time, private sector banks as a group met
priority sector lending targets, including sub-targets for major heads in
2023-24, particularly in agriculture, according to central bank data.
Although all bank groups managed to achieve their stipulated overall
targets and sub-targets, private sector banks did better than their public
sector peers.
(Economic Times)
Adani Enterprises to exit FMCG business:
Adani Enterprises Limited (AEL) will exit from Adani
Wilmar, the FMCG joint venture between its
subsidiary Adani Commodities LLP (ACL) and
Wilmar International owned Lence Pte (Lence), to
focus investments on its core infrastructure business,
the firm said in an exchange filing on Monday. The
divestment of its share in Adani Wilmar will raise $2billion for the Adani
Group flagship AEL, which it said will be used to “turbocharge its
investments in the core infrastructure platforms in energy & utility,
transport & logistics and other adjacencies”.
(Financial Express)
Health insurance payouts fall short: Only 71.3% of claims
settled in FY24: Health insurance companies in India paid out 71.3% of
the ₹1.2 lakh crore in health insurance claims filed during the 2023-24
financial year, according to data from the Insurance Regulatory and
Development Authority of India (IRDAI). Insurers received over 3 crore
new claims totaling ₹1.1 lakh crore and faced an additional ₹6,290 crore
in outstanding claims from previous years. Nearly 2.7 crore claims, worth
₹83,493 crore, were paid. This represents 82% of the claims by volume
and 71.3% by value .
(Economic Times)
NBFCs' loan growth moderates significantly to 6.5% in H1FY24:
RBI report: Non-banking financial companies (NBFCs) remain healthy
with substantial capital buffers, robust interest margins, strong earnings,
and improving asset quality, according to the Reserve Bank of India
(RBI). Loan growth in the shadow banking sector moderated significantly
to 6.5 per cent on a half-year-on-half-year (HoH) basis in September
2024, following the RBI’s decision to increase risk weights on NBFC
lending to specific consumer credit categories and on bank lending to
NBFCs, as detailed in the Financial Stability Report.
(Business Standard)
DFS, GIC and LIC pitches for GST rate rejig
on insurance premia but with ITC: As the
Group of Ministers (GoM) get ready for another
round of discussions, three key stakeholders,
Financial Services Department, GIC and LIC
support lowering GST on insurance premia but with
input tax credit (ITC). According to sources, GoM
received references from various stakeholders.
Financial Services Department made a case for cutting GST on individual
health insurance and individual term life insurance premia to 5 per cent
with input tax credit (ITC). General Insurance Corporation suggested
cutting GST on health insurance premia to 12 per cent with ITC. In its
submission, LIC did not mention any specific rate, though it said “ITC
should be available if GST on term life insurance is rationalised.” As on
date, the premia for health insurance, term and unit-linked insurance
plans attracts 18 per cent GST. On endowment plans, the GST is applied
differently. While it is 4.5 per cent for premium paid during the first year,
it is 2.25 per cent from the second year. For life insurance in the form of
single premium annuity policies, the GST rate is 1.8 per cent. Rates are
the same for all age groups
(Business Line)
Government extends deadline for direct tax Vivad Se Vishwas
Scheme: The Central Board of Direct Taxes (CBDT) on Monday
announced an extension of the deadline for taxpayers participating in the
Vivad Se Vishwas scheme. Initially set for December 31, 2024, the new
deadline is now January 31, 2025. The CBDT stated that the extension
allows taxpayers additional time to determine the amount payable as
specified in column (3) of the relevant table in the scheme. In her Budget
2024 speech, Union Finance Minister Nirmala Sitharaman announced
the Vivad Se Vishwas scheme, aimed at helping taxpayers resolve
disputes with the income tax department. The scheme enables taxpayers
to settle their outstanding tax liabilities by paying the disputed amount
along with a specified percentage.
(Business Standard)
RBI KEY RATES FOREX EQUITY
(RBI REF. ) /COMM. MARKET
Repo Rate: 6.50% INR / 1 USD : 85.4655 Sensex: 78248.13 (-450.90)
SDF: 6.25% INR / 1 GBP : 107.5686 NIFTY: 23644.90 (-168.50)
MSF /Bank Rate: 6.75% INR / 1 EUR : 89.1360 Bnk NIFTY: 50952.75 (-358.55)
CRR: 4.00% INR /100 JPY: 54.1000
SLR: 18.00%
BUSINESS/FINANCIAL CONCEPTS
ON-US & OFF-US TRANSACTION
An on-us transaction is a payment made at a bank or financial
institution's own terminal, while an off-us transaction is a payment
made at a different bank's terminal.
On-us transaction: The issuing and acquiring banks are the same,
so the transaction is processed internally. This means there are fewer
or no charges for the cardholder or the financial institution because no
external entity is involved. On-us transactions are often quicker to
process because they don't involve an interbank network..
Off-us transaction: The issuing and acquiring banks are different, so
funds are moved between banks and an interbank settlement is
required. Off-us transactions may incur fees, especially when using
ATMs owned by other banks. There may also be security risks
associated with using ATMs or payment terminals outside of one's
bank, such as card skimming or fraud.
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