Banking and Financial News – 17 June 2014

Payments banks to come soon: RBI – (Mint)

• India’s first payments bank, which will provide deposit and payment services but not extend loans, will be ready soon.

• Payments banks, which will bring financial services to unbanked areas of the country, can start operations with a capital of just Rs.50 crore.

• All their money will be invested in safe government securities.

• They will be required to comply with all RBI guidelines for commercial banks.

• Existing banks may be permitted to create subsidiaries to operate payments banks.

• Payments banks may be created by converting prepaid payment issuers (PPIs). PPLs provide cards that customers can use to make payments with the money stored in them. E.g. Itz Cash Card Ltd, Oxigen Services (India) Pvt. Ltd and Airtel mCommerce Services Ltd.

• Entry of payments banks is seen as a step closer to moving towards a differentiated banking licence regime, where the central bank issues licences to new banks to undertake specific banking operations.

Tax Administration Reforms Commission Recommendations (The Hindu)

(Headed by Parthasarathi Shome)

• Retrospective amendments to tax laws should be avoided.

• Income Tax return should include Wealth Tax details.

• Separate budget allocation to ensur time bound tax refund.

• Passbook scheme for TDS (Tax deducted at source)

• Abolish post of Revenue Secretary- allocate Revenue dept functions to CBDT (Central Board of Direct Taxes) & CBEC (Central Board for Excise & Customs) and both these boards to eventually merge into Central Board of Direct & Indirect taxes.

• Broaden the use of PAN (Permanent Account Number)

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Courtesy : Mint , The Hindu