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Why money is so often illegally remitted in India?

Akhilesh Bhargava

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While it has been a routine and traditional business practice in India, to illegally remit money abroad and evade taxes, despite very stringent provisions of penalty and prosecution under FEMA and the Income Tax Act, why is it becoming such a regular practice? Mr. Akhilesh Bhargava, Business Editor of HW Business and Finance shares his insights on the matter

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Indian Economy

Forex reserves rise by USD 150 million to USD 398.3 billion

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MK jain forex

Mumbai | Forex reserves increased by USD 150 million to USD 398.272 billion for the week to February 15 on a rise in currency assets and gold holdings, the Reserve Bank said on Friday.

In the previous reporting week, the overall reserves had surged by USD 2.11 billion to USD 398.122 billion.

The foreign currency assets, a major component of the overall reserves, increased USD 88.9 million to USD 371.07 billion for the reporting week, the RBI said.

Expressed in the greenbacks, foreign currency assets include the effect of appreciation/depreciation of non-US currencies such as the euro, pound and the yen held in the foreign exchange reserves.

The overall reserves had touched a record high of USD 426.028 billion in the week to April 13, 2018. Since then, the forex kitty has been on a slide and is now down by close to USD 32 billion.

The value of the gold reserves increased USD 78.2 million to 22.764 billion, the apex bank said.

The special drawing rights with the International Monetary Fund also came down by USD 7.8 million to USD 1.455 billion. Similarly, the country’s reserve position with the Fund also declined by USD 9.1 million to USD 2.982 billion, it said.

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Business & Finance

Rupee recovers 10 paise to 71.14 vs dollar, posts 2nd weekly gain

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Mumbai | The rupee on Friday gained 10 paise to close at 71.14 against the US dollar on heavy foreign capital inflows after growing expectations that the Federal Reserve would keep interest rate on hold this year.

A strengthening dollar ahead of the US-China trade talks and surging crude oil prices, however, restricted the rupee gains.

Foreign portfolio investors pumped in a huge Rs 6,311.01 crore into capital markets Friday, provisional exchange data showed.

Analysts said that weak US economic data propped up expectations that the US Fed would keep the rate steady this year. The Fed minutes this week had also called for patience over tightening of rates in view of slowing global economic growth.

New orders for US-made capital goods dropped in December, signalling slow spending on machinery and equipment that could hamper economic growth, the data released Thursday showed.

“Indian rupee gains ahead of the US China trade talks. However, the improvement in the US China dialogue has been partly priced in and positive impact on market could be limited and short term,” VK Sharma, Head PCG & Capital Markets Strategy, HDFC Securities said.

At the Interbank Foreign Exchange (forex) market, the local unit opened almost flat at 71.23 and touched a high of 71.11 to the dollar in day trade.

The rupee finally settled at 71.14, showing a gain of 10 paise over the last close. The rupee had skidded by 13 paise to close at 71.24 against the US dollar Thursday.

On weekly basis, the rupee gained 9 paise or 0.13 per cent, its second week of gains in a row.

The US dollar recovered from initial losses to trade 0.09 per cent up at 96.55 ahead of US-China trade negotiations.

US President Donald Trump will meet China’s top trade negotiator on Friday night to forge a preliminary deal before tariffs on some Chinese imports more than double next month.

Brent crude futures, the global oil benchmark, was also trading 0.13 per cent higher at USD 67.16 per barrel.

The Financial Benchmark India Private Ltd (FBIL) set the reference rate for the rupee/dollar at 71.2177 and for rupee/euro at 80.7528. The reference rate for rupee/British pound was fixed at 92.8271 and for rupee/100 Japanese yen at 64.29.

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Business

Banks’ consortium considering Rs 500 cr interim funding to Jet Airways, says PNB chief

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New Delhi | A consortium of banks is considering an interim funding of Rs 500 crore for debt-laden Jet Airways but a final decision is yet to be taken, Punjab National Bank Managing Director Sunil Mehta said on Friday.

PNB is part of the lenders’ consortium, led by State Bank of India (SBI), that has extended loans to the airline.

The full service carrier is looking to raise funds and restructure its debt.

Regarding Jet Airways, Mehta said the consortium is looking at the entire process and something is being worked out.

“Of course, (the) consortium is in favour (of interim funding). It is a going concern and we would like to preserve its (airline’s) value,” he said.

About interim funding for the carrier, Mehta said, “it is too premature to tell you about that plan” and the bankers are already working on it.

The SBI has taken a lead on it, and let the entire plan be worked out, he said, adding that it would be too early to announce the timings.

“Rs 500 crore that you are talking about is the interim funding but banks are looking at the long term resolution of the issues for which the plan is already in place for discussions,” he noted.

He was responding to a query about the banks’ extending interim funding to Jet Airways.

On February 14, the board of Jet Airways approved a Bank-Led Provisional Resolution Plan (BLPRP), whereby lenders would become the largest shareholders in the airline.

Lenders are to convert part of the airline’s debt into 11.4 crore shares at a consideration of Re 1 apiece as per RBI norms.

Later, appropriate interim credit facilities by domestic lenders would be sanctioned to the airline, as per a regulatory filing made on February 14.

The extraordinary meeting of Jet Airways shareholders was held on February 21 where various proposals were discussed. The results of the voting on the proposals would be released on Saturday.

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