• RBI cuts repo rates
• RBI eases FCCB buyback norms further
• Royalty fee cap may be raised up to 5%
• Mumbai’s municipal body raises taxes on leased offices
• Apex court gives statutory shield to SEBI from tribunal
• Reserve Bank of India (RBI) has, in its Annual Policy for 2009-10, cut key policy rates – repo and reverse repo – by 25 basis points each in order to push banks to lend more at viable rates and prop up the sagging economy. It has reduced the reverse repo rate – the interest rate RBI pays to banks on the funds deployed with it – to 3.25 per cent (lower than the savings bank rate of 3.50 per cent) and the repo rate – the interest rate that banks pay on funds borrowed from RBI – to 4.75 per cent. Responding to the rate cut, ICICI Bank announced a 50 basis points cut in its benchmark advance rate to 16.25 per cent and deposit rates by 25 to 50 basis points with effect April 24, 2009. Public sector banks such as SBI, Bank of Baroda, Canara Bank and Indian Bank are expected to take a decision soon. (BL)
• RBI has, in its Annual Statement of Monetary Policy, further eased norms for Indian companies to use their internal accruals for buy-back of their foreign currency convertible bonds (FCCBs), as corporate houses continue to queue up to buy back their foreign loans at a deep discount. It has proposed to increase the total amount of permissible buyback of FCCBs, out of internal accruals, from $50 million of the redemption value per company to $100 million and has linked the higher amount of buyback to larger discount. (BL)
• According to sources, the govt is examining a proposal to allow foreign hospitality and technology companies to charge up to 5% of domestic sales as royalty or trademark fee from Indian companies for the use of their brand, trademark or technology. It is planning to raise the caps on royalty and trademark licence fees from 2% and 1%, respectively, of revenues generated in India and exempt firms from seeking Foreign Investment Promotion Board’s (FIPB) approval if the payments are less than 5% of revenues. Also, foreign companies could be allowed to introduce charges like consultation fee, management fees and advisory fees. The move follows demand from several foreign companies, particularly hospitality majors like Hilton International, Four Seasons Hotels & Resorts and Hyatt Hotels & Resorts. (ET)
• Municipal Corporation of Greater Mumbai has raised property taxes on buildings located in the key business district of Nariman Point and other major commercial centres of the city that house global investment banks, commercial banks, consulates and other multinational companies. The move is expected to force landlords to charge tenants higher rent depending on individual agreements. In some cases, landlords have been asked to pay as much as Rs 250 per square foot against Rs 16 to Rs 32 per square foot a year earlier. The corporation has taken recourse to Section 3 (1b) of the Maharashtra Rent Control Act that exempts properties leased to banks, finance companies, multinational companies, public sector entities, consulates and firms with paid-up capital of more than Rs 1 crore from the purview of the Rent Control Act. (BS)
• Supreme Court has ruled that the Securities Appellate Tribunal (SAT) has no discretionary power to interfere with orders passed by Securities & Exchange Board of India (SEBI) while allowing SEBI’s plea that the tribunal has to do what is prescribed under the statute. The ruling, which came in the appeals of Saikala Associates and Shilpa Stock filed by SEBI challenging the orders passed by the tribunal, states “When something is to be done statutorily in a particular way, it can only be done that way. There is no scope for taking shelter under a discretionary power”. (ET)
