28th May 2009

Audit & Acc - Misc.
Restore audit limit for non-CAs, ICAI urges to Maharashtra govt
Delhi : Objecting to the Maharashtra government’s decision of removing the audit limit for non-CAs government-authorised auditors, the accounting regulator Institute of Chartered Accountants of India (ICAI) has urged to restore the audit limit of Rs 1 lakh at the earliest. No audit limit enables the auditors to perform audit of trusts of any size. ICAI president Uttam Prakash Agarwal told FE, “In case a CA fails to discharge his duties properly, disciplinary mechanism is in place but in case of the government-authorised auditors, no such mechanism exists presently.”

Reform IR accounting procedures Article
Delhi : THE accounting procedure if the Railways (IR) is not commercial in nature and therefore its financial results don’t convey its true financial health. As a result, corrective measures cannot be taken in time. Banks and other financial institutions cannot appreciate IR’s financial results and it becomes difficult for them to decide whether to extend a loan to the railways or not. In 2003-04 ADB while sanctioning a loan to IR put a condition that it must reform its accounting procedures on commercial lines. Not much progress has been made so far in this regard. Indian Railways’ accounting procedure is on ‘realisation basis’ whereas commercial accounting is on ‘accrual basis.’ However, with minor modifications the current accounting procedures of IR may be brought on par with commercial accounting procedure.
Finance & Money Markets

Indian HNIs bitten by overseas realty bug
West Bengal : THE slump in global realty markets has thrown open opportunities for Indian high networth individuals (HNIs). The near 25-35% fall in property prices in Australia, the US, the UK, South Africa and markets closer home such as the Gulf and Singapore, has triggered a huge surge in demand from Indian buyers keen to invest in overseas property. Realty brokers claim Mumbai and Delhi — which usually lead the pack in overseas property deals — are witnessing nearly 100% growth in such transactions since February with some 25 to 30 such transactions taking place every month. Brokers claim buyers in Surat, Bhubaneshwar, Jaipur, Ahmedabad, Vadodara, Kolkata and Amritsar are also showing interest. “It’s really a good time to buy property overseas since prices in most of these markets are even cheaper than in some top Indian cities. The demand is more in Dubai, Malaysia, Singapore, Thailand, Australia and London,” CB Richard Ellis CMD (South Asia) Anshuman Magazine told ET.

A better repository for forex surpluses
Delhi : The ongoing financial crisis exemplifies the hopes that once used to be reposed on the dollar and SDRs by international bankers, money-managers and developing economies. Initially alluded to as ‘paper gold’, the SDR has always been as strong (or, as weak) as its constituents—its composition being, US$ (44%), Eur (34%), Japanese yen (11%) and sterling (11%). But that precisely is what is occasioning discomfort in China. Gyrations in the value of the dollar vis-à-vis other major currencies and SDRs are especially worrisome for China since, very often, they imply a weakening of the world’s first-ranked reserve currency. The story is complete once one appreciates the mammoth sums that Beijing has invested in US Treasury Bills. Already in September 2008, Beijing had invested more than 60% of its entire, $1.9 trillion balance of payments surplus in official US debt instruments! The forex holdings of the other three Bric economies at that time were Russia ($475 billion), India ($253 billion) and Brazil ($201 billion).

New norms make ‘secured’ debt costly business for cos
Maharashtra : A NEW rule in the financial markets has stumped several companies and lending institutions, forcing some to hold back their bond offerings. A week ago, capital market regulator Sebi decided that companies raising money through ‘secured’ bonds and debentures should make sure the papers issued are fully backed by assets. The move could change the way companies mop up debt in the local market. For years, companies sold debentures with an underlying security that was worth a fraction of the amount raised. For instance, an issuer selling Rs 200 crore of bonds to bulk investors such as insurance firms, mutual funds and banks usually does it by creating a security of, say, Rs 1 crore or even less. The security shown could be a small property owned by the company selling the secured bonds.

State-run banks to cut lending rates - report
Delhi : Indian state-run banks plan to cut lending rates by 100-150 basis points in about two weeks on a finance ministry directive to follow the Reserve Bank of India (RBI) lead, the Economic Times said on Wednesday.The cut is expected before June 12, when Finance Minister Pranab Mukherjee is scheduled to meet the chiefs of state-run banks to help boost loan growth, the newspaper said.Officials at State Bank of India, Bank of Maharashtra, UCO Bank, Corporation Bank and Bank of Rajasthan confirmed the development, it said. The central bank has slashed its key short-term lending rate by 425 basis points since mid-October last year, but the benchmark lending rates of five major commercial banks have fallen less than 200 basis points since then

Insurance roars back to life in Apr, riding on LIC growth
West Bengal : After suffering a 6% decline in first premium income (FPI) in fiscal 2008-09, the life insurance industry is back on the growth path. The first month of the current financial year (2009-10) saw a 29% growth in FPI, thanks to Life Insurance Corporation (LIC). LIC, whose FPI dipped 10% during the previous fiscal, recorded a 69% growth during April 2009.

FMC suspends trading in sugar futures
Maharashtra : Forward Markets Commission (FMC) on Tuesday suspended futures trading in sugar even as the trade was betting on further liberalisation after the Government recently lifted the two-year ban on wheat futures. Rajeev Agarwal, Member, FMC, said, "We have suspended launch of new sugar contracts till December 31. The decision was taken with abundant caution considering the demand-supply position and inflationary concern". According to the directives of the FMC, no new sugar contracts will be launched, NCDEX said in its circular to members and added that the FMC has further directed that the permission already granted for yet-to-be-launched contracts stands suspended till December 31 unless notified otherwise

INTERNATIONAL BUSINESS
Google increasingly battles Facebook in search biz
Intl : Google has long been the king of search, dominating rivals including Yahoo Inc. and Microsoft Corp. But it increasingly sees social networks such as Facebook as challengers to its search engine, a company official said Monday. As people search out advice online for everyday, personal decisions, the standard list of links served up by Google is not seen as intimate or trustworthy.

JPMorgan’s $29-billion WaMu windfall turned bad loans into income
Delhi : JPMorgan Chase & Co. stands to reap a $29 billion windfall thanks to an accounting rule that lets the second-biggest US bank transform bad loans it purchased from Washington Mutual Inc into income. Wells Fargo & Co, Bank of America Corp. and PNC Financial Services Group Inc. are also poised to benefit from taking over home lenders Wachovia Corp., Countrywide Financial Corp. and National City Corp, regulatory filings show.
MERGER & ACQUISITION

Etisalat-Swan gets DoT NoC to buy Allianz Infra
Delhi : Telecom service provider Etisalat-Swan has bought out Allianz Infratech, marking the first acquisition among the new companies who were given telecom licences last year. Etisalat-Swan has also got a ‘no-objection certificate’ from Department of Telecom (DoT) for the deal, which is estimated to be worth a few hundred crores. Allianz had applied for telecom licences on a pan-India level, but was given permission to launch services in only two circles — Madhya Pradesh & Bihar.