France has taken capital controls to a new level, banning the shipment of physical gold, silver, and cash through the mail, effectively shutting down the precious metals trade in France!

France has prohibited the sending of currency, “coins and precious metals” by mail.

In new legislation which was enacted May 23rd, the French government decreed that it is forbidden to send all forms of currency – coins and cash and all forms of precious metals – coins, bars and jewellery by mail.  >> Read More

Attention of Authorised Persons is drawn to our A.P. (DIR Series) Circular No. 103 dated May 13, 2013 on the captioned subject in terms of which, it was decided to restrict the import of gold on consignment basis by banks, only to meet the genuine needs of the exporters of gold jewellery. It has now been decided to extend the provisions of this circular to all nominated agencies/ premier / star trading houses who have been permitted by Government of India to import gold. Accordingly, any import of gold on consignment basis by both nominated agencies and banks shall now be permissible only to meet the needs of exporters of gold jewellery.

2. It has further been decided that all Letters of Credit (LC) to be opened by Nominated Banks / Agencies for import of gold under all categories will be only on 100 per cent cash margin basis. Further, all imports of gold will necessarily have to be on Documents against Payment (DP) basis. Accordingly, gold imports on Documents against Acceptance (DA) basis will not be permitted. These restrictions will however not apply to import of gold to meet the needs of exporters of gold jewellery.

3. The above instructions will come into force with immediate effect. ADs may bring the contents of this circular to the notice of their constituents and customers concerned. They are also advised to strictly ensure that foreign exchange transactions effected by / for their constituents are compliant with these instructions in letter and spirit.

4. All other instructions relating to import of gold issued from time to time shall remain unchanged.

5. The directions contained in this circular have been issued under Section 10(4) and Section 11(1) of the Foreign Exchange Management Act (FEMA), 1999 (42 of 1999) and are without prejudice to permissions / approvals, if any, required under any other law.

The Reserve Bank of India had issued Guidelines for Licensing of New Banks in the Private Sector on February 22, 2013. Following issue of the guidelines, RBI received several queries regarding the guidelines. To comprehensively reply to all queries, RBI issued a press release on March 7, 2013 asking that queries on the guidelines may be sent to the Reserve Bank by April 10, 2013 and that clarifications would be posted on its website.

In response to that press release, the Reserve Bank of India received a large number of queries from intending applicants seeking clarifications on the guidelines. The queries have since been examined and the clarifications would be posted on the RBI website on June 03, 2013.

Rating agency ICRA said banks’ NPA ratios may see a sharp rise to 5.5-6.5% in June 30, 2015 from the present 3.3% once the RBI’s revised guidelines on bad asset classification come into force.

“As for the likely impact of the guidelines on non-performing assets (NPAs), there could be a steep increase in the reported NPA percentage from 3.3% as on March 2013 to as high as 5.5-6.5% as in June 30, 2015,” the rating agency said in a note.

Giving the rationale behind such possible rise, the report said that with the change in classification of old restructured advances would be the reason behind this. >> Read More

Earlier this month, when the Reserve Bank of India (RBI) indicated that a cut in policy rates could be the last in a series of four cuts since April 2012, it set off alarm bells for industry, which has not been happy despite a 7.25 per cent repurchase (repo) rate, the lowest since May 2011. In fact, the central bank has often been criticised by the government and industry for its conservative approach in easing interest rates on grounds that high rates are responsible for stalled investments and, therefore, growth. Is this criticism warranted?

Things turned sour late last year when Finance Minister P Chidambaram openly remarked: “If the government has to walk alone to face the challenge of growth, well, we will walk alone.” The statement came after RBI Governor Duvvuri Subbarao, in his policy review on October 30, 2012, cut the cash reserve ratio from 4.5 per cent to 4.25 per cent but resisted pressure to cut the repo rate, which is the rate at which banks access funds from the central bank. Just a day earlier, the finance minister had outlined a fiscal consolidation map and indicated that he expected the RBI to ease interest rates. >> Read More

The Reserve Bank of India (RBI) said on Monday banks would not be allowed to give loans against units of gold exchange-traded funds (ETFs) and gold mutual funds.

As these products are backed by bullion and primary gold, the restriction on grant of loan against gold bullion will be applicable to loan against units of gold ETFs and units of gold mutual funds, the RBI said in a statement.

The RBI also said that while giving loan against gold coins sold by banks, the lenders should ensure that the weight of the coins does not exceed 50 grams per customer.

In a separate statement, the central bank said no advances should be given by non-bank financial companies (NBFCs) against bullion, primary gold and gold coins.

The RBI also said NBFCs should not give loans for the purchase of gold in any form including primary gold, bullion, jewellery, coins, units of gold ETFs and units of gold mutual funds.

Down the corridor in Brussels, Angela Merkel has told reporters that EU leaders are determined to stop large companies from paying too little tax in countries where they operate.

Reuters reports:

The European Union will ensure big companies pay more taxes in the countries where they are based, German Chancellor Angela Merkel said on Wednesday.

“We will work towards ensuring companies have to pay more where they are based,” she said in Brussels at the end of an EU summit, adding that this would affect big companies most.

Merkel also told reporters that leaders had make significant progress by agreeing to prevent banks keeping savings information secret.

India’s gold imports are likely to exceed last year’s level to around 900 tonnes in the current calendar year on higher demand despite government curbs on its shipments to rein in current account deficit, a top official of World Gold Council said on Monday.

The Indian government’s cyber watchdog is looking into how the computer systems of two companies were breached in a sophisticated global ATM heist that saw $45 million stolen from two banks in the Middle East.

EnStage Inc, which operates from Bangalore, and ElectraCard Services, which is based in the Indian city of Pune, processed card payments for the two banks that were hit in the theft, according to several people familiar with the situation.

“We are investigating the technical aspect,” Gulshan Rai, director general of the Indian Computer Emergency Response Team (CERT), part of the department of electronics and information technology, told Reuters by phone on Sunday.

“What kind of breach has happened in the system, how did it happen, what processes are in place, and the entire technical aspect we will look at,” he said.

He said the agency started its investigation on Saturday.

International rating agency Fitch on Thursday said the asset quality woes of banks are unlikely to ease any time soon and the gross non-performing assets are set to inch up to 4.4 per cent this fiscal from the likely reading of 4.2 per cent in 2012-13.

“Banks’ latest results show a continued decline in the overall asset quality as the economic downturn persists…The central bank’s recent rate cuts are unlikely to ease asset quality pressures to any great extent or help the banks correct their funding imbalances,” Fitch said in a note.

It said infrastructure is the biggest risk for the banks during the fiscal, which will see the gross bad assets ratio climbing up to 4.4 per cent from the 4.2 per cent estimated for FY13. >> Read More