Amendments to Finance Bill,2010 [1 Attachment]

[Attachment(s) from Ashwin Nagar included below]

FM's Oopening Speech at Consideration Stage of Finance Bill,2010- see attachment

Finance Bill ,2010 passed in Lok Sabha On 29.04.2010.Few New Tax relief has been proposed during the discussion and same has been incorporated in the Bill while passing by the Lok Sabha. Amendments are given below.

AMENDMENTS TO FINANCE BILL, 2010

Sl. No.		Clause No.
1.	Page 5, line 46, Omit 'and";'
2.	Page, after line 46, insert – '(ab) on or after the 1st day of April, 2010, where the specified business is in the nature of building and operating a new hospital with at least one hundred beds of patients; (ac) on or after the 1st day of April, 2010, where the specified business is in the nature of developing and building a housing . project under a scheme for slum redevelopment or rehabilitation framed by the Central Government or a State Government, as the case may be, and which is notified by the Board in this behalf in accordance with guidelines as may be prescribed; and";	10 10
3.	Page 5, line 48,— for "and clause (aa)" substitute "clause (aa), clause (ab) and clause (ac)'"	10
4.	Page 5, after line 52, insert— '(v) building and operating, anywhere in India, a new hospital with at least one hundred beds for patients; (vi) developing and building a housing project under a scheme for slum redevelopment or rehabilitation framed by the Central Government or a State Government, as the case may be, and notified by the Board in this behalf in accordance with the guidelines as may be prescribed;'.	10
5.	Page 6, line 47,— after "to a limited liability partnership" insert "or any transfer of a share or shares held in the company by a shareholder".	18
6.	Page 7, for lines 24 and 25, substitute— "asset or share or shares not charged under section 45 by virtue of conditions laid down in the said proviso shall be deemed to be the profits and gains chargeable to tax of the successor limited liability partnership or the shareholder of the predecessor company, as the case may be, for".	19
7.	Page 7, after Iine 30, insert— '(aa) after sub-section (2A A), the following sub-section shall be inserted with effect from the 1st day of April, 2011, namely:— "(2AAA) Where the capital asset being rights of a partner referred to in section 42 of the Limited Liability PartnershipAct, 2008 (6 of 2009) became the property of the assessee on conversion as referred to in clause (xiiib) of section 47, the cost of acquisition of the asset shall be deemed to be the cost of acquisition to him of the share or shares in the company immediately before its conversion.";'	20
8.	Page 14, after line 7, insert— Amendment of the Second Schedule. '62A. In the Second Schedule to the Customs Tariff Act, against heading No. 16, in column (3), for the entry "Rs. 2500 per tonne", the entry "Rs. 10000 per tone" shall be substituted.'.	62A (New)
9.	Page 17, after line 49, insert— '(3A) for clause (77c), the following clause shall be substituted, namely:— '(77c) "passenger" means any person boarding an aircraft in India for performing domestic journey or international journey.';'.	75
10.	Page 39, line 9, in column (3), after "on inputs" insert "or input services".	The Eighth Schedule

Pranab hands out tax concessions to India Inc

Opposition unhappy, says nothing for the common man.

Our Bureau

New Delhi, Apr 29

The Finance Minister, Mr Pranab Mukherjee, today made a number of amendments to the Finance Bill including raising the export duty on iron ore lumps and increasing the standard rate on raw cotton exports.

Simultaneously, he reduced the import duty on melting scrap for stainless steel, and the service tax burden on construction services and air travel. Mr Mukherjee also offered a debt relief package for coffee growers.

The main Opposition party, Bhartiya Janata Party (BJP), walked out saying that there was no relief for the common man and farmers. The Left parties too staged a walkout. The Finance Bill was later passed by the Lok Sabha.

As part of the reply to the discussions on the Finance Bill, 2010, the Finance Minister announced a debt relief package to the small growers of coffee. He also provided relief to medium and large growers by allowing re-scheduling of loans. The total financial implication for the Centre would be Rs 241.33 crore, while the benefit to coffee growers will be about Rs 362.82 crore.

Tax Deduction

On the income-tax front, Mr Mukherjee announced that new hospitals with at least 100 beds and constructed anywhere in India would now be entitled for investment-linked deduction.

Also, housing projects developed for slum redevelopment and rehabilitation under Rajiv Awas Yojana (RAY) will be eligible for investment-linked deduction for income-tax purposes.

Another relief for the housing sector came by way of reduced service tax burden on construction services.

"Several suggestions have been made by trade associations. Considering all inputs, I propose to provide tax relief to this sector by enhancing the rate of abatement from 67 per cent to 75 per cent of the gross value where such value includes value of land constructed upon," Mr Mukherjee said.

However, the real-estate industry felt that the measures for housing were a mixed bag. "Although the service tax outgo will now be calculated on 25 per cent and not 33 per cent of the value of the house, it still falls short of expectations. The industry was hoping that land value will be completely excluded from such calculation, which has not happened. Also, the abatement is lower than what the industry had sought (90 per cent)," said Mr Pratik Jain, Executive Director of KPMG.

Real-estate company Parsvnath Developers Chairman, Mr Pradeep Jain, said the Government's move to exempt service tax on constructions under JNNURM and RAY was a welcome step.

Meanwhile, on the aviation sector, the Finance Minister clarified that Rs 100 will be the maximum service tax a domestic air traveller will pay for each journey, while travel to and from the North-East will be totally exempt. Mr Mukherjee added that Rs 500 will be the maximum that an economy class international air traveller will have to pay as service tax.

The Finance Minister also announced an increase in the export duty on iron ore lumps from 10 per cent to 15 per cent. This move was hailed by the steel-makers, stating that this has been a long-standing demand of the steel industry.

"This is certainly a positive move for the steel industry as domestic availability of iron ore will increase which will help steel makers," said Mr Sushil Maroo, Director, Jindal Steel and Power Ltd.

Limited Liability Partnership

On limited liability partnership (LLP), the Finance Minister announced that transfer of shares by the shareholders of the company would be tax exempt. This move was in consequence of the decision to allow tax neutrality for conversion of a company into LLP.

"The one important and very positive change is the exemption from levy of capital gains tax in the hands of shareholders upon the conversion of a company into a limited liability partnership. Arguably, such a conversion is a tax neutral event as it is, but the clarification is a step in the right direction.

"One had hoped that the conditions which permit only small companies to convert tax neutral would have been removed," Mr Dinesh Kanabar, Deputy CEO and Chairman Tax, KPMG in India told Business Line.

Drugs cheaper

The Finance Minister also announced reduction in basic customs duty on 11 specified drugs including two anti-cancer and one for the treatment of AIDS to 5 per cent.

These drugs are also being exempted from countervailing duty by way of excise duty exemption.

Meanwhile, Fortis Healthcare Ltd welcomed the measures announced for the health care industry. "It will contribute to the creation of much needed infrastructure in the country. This is symbolic of the Government's efforts to provide the support required by the sector," the company said in a statement.

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Attachment(s) 1 of 1 File(s)

FINANCE

CFE APPLICATION

Certified Facilitation Centres under ACES Project of the CBEC - (13-04-2010)

Chartered Accountants in practice for one year or more Become Certified Facilitation Centre (CFC) for providing facilities to Central Excise and Service Tax assessees to file returns and other documents electronically under Automation of Central Excise and Service Tax (ACES) Project of the CBEC. The Institute of Chartered Accountants of India (ICAI) is pleased to announce signing of Memorandum of Understanding with the Central Board of Excise and Customs, Department of Revenue, Ministry of Finance, Government of India to facilitate setting up of Certified Facilitation Centres (CFCs) under ACES Project by Chartered Accountants in practice / proprietary concerns of Chartered Accountants / firms of Chartered Accountants. Any member/proprietor of a proprietorship firm/any partner of a partnership firm desirous of operating a CFC in his/firm's name is required to make an application to the ICAI together with the requisite information, whereupon the ICAI will issue a Certificate to operate Facilitation Centre under ACES Project of the CBEC. CBEC will issue a user name and password to the CFC on the basis of which, the CFC will be able to upload returns and other documents for Central Excise and Service Tax assessees . The names of the CFCs along with their contact details as provided by the CFCs will be put up on the website of the ICAI and the CBEC. The eligibility criteria, fee schedule and obligations of CFCs are set out in the Memorandum of Understanding and in the FAQs on the subject. Submit your Scanned Application Forms at : cbectech@icai.org. Queries relating to setting up of Certified Facilitation Centers may be sent at cfcaces@icai.org. Please click here for Memorandum of Understanding Please click here for FAQs Please click here for Application Form for CFC under ACES Project

IPL from a Finance perspective [1 Attachment]

About IPL, What's going on in BCCI could be of Businessman's interest, what's going on in Parliament is of Politician's interest, but what is going on in IPL as a Financial Project, is certainly of Chartered Accountants's interest.

So, please find attached a powerpoint presentation giving insights of IPL from a Finance perspective.

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Attachment(s) from Ashwin Nagar

1 of 1 File(s)

IES_IPL_in_a_Finance_perspective.ppt

New Income Tax Return Form SARAL II for Assessment Year 2010-11 [2 Attachments]

New Income Tax Return Form SARAL II for Assessment Year 2010-11.

CBDT notifies New Income Tax Return Form SARAL II (ITR 1) for Assessment Year 2010-11 for Individuals having income from Salary/Pension/Income from One House Property (Excluding loss brought forward from previous years) / Income from Other Sources (Excluding winning from Lottery and Income from Race Horses). CBDT also notifies Income Tax Return Verification Form ITR-V for Assessment Year 2010-11 for SARAL II (ITR-1) ITR-2, ITR-3, ITR-4, ITR-5, ITR-6 & ITR-8 transmitted electronically without digital signature.

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Attachment(s) from Ashwin Nagar

2 of 2 File(s)

HtmlFileProcess.pdf

SARAL-II-ITR-1.pdf

Implementation of Section 51A of Unlawful Activities (Prevention) Act, 1967

Implementation of Section 51A of Unlawful Activities (Prevention) Act, 1967

The provisions of the Unlawful Activities (Prevention) Act,1967 were amended in 2008, by inserting Section 51A which was notified on 31.12.2008 by the Govt. of India. Section 51A reads as under :-

"51A. For the prevention of, and for coping with terrorist activities, the Central Government shall have power to -

(a) freeze, seize or attach funds and other financial assets or economic resources held by, on behalf of or at the direction of the individuals or entities Listed in the Schedule to the Order, or any other person engaged in or suspected to be engaged in terrorism;

(b) prohibit any individual or entity from making any funds, financial assets or economic resources or related services available for the benefit of the individuals or entities Listed in the Schedule to the Order or any other person engaged in or suspected to be engaged in terrorism;

(c) prevent the entry into or the transit through India of individuals Listed in the Schedule to the Order or any person engaged in or suspected to be engaged in terrorism."

In order to implement the provisions of Sec. 51A effectively, the Ministry of Home Affairs, Govt. of India requested the Ministry of Corporate Affairs to issue an appropriate order to ICAI,ICSI and ICWAI to sensitize their members to the provisions of Section 51A of Unlawful Activities(Prevention ) Act, 1967. Accordingly the Ministry of Corporate Affairs vide its letter dated 22.03.2010 (copy enclosed) asked the ICAI to advise its members to act as per mandate of the Ministry of Home Affairs.

Accordingly, all members of ICAI are informed that as and when any member come across any such fact which is connected with the violation(s) of provision(s) of the Unlawful Activities (Prevention) Act, 1967, he must take action forthwith for the implementation of Sec 51A as per procedure laid down in the Office Memorandum dated 22/02/2010 issued by Ministry of Home Affairs, Government of India (copy of the Office Memorandum dated 22/02/10 is enclosed ).

In other words, the members of ICAI must ensure that in case any of their client match with the particulars of designated individual / entity, as per Order dated 08/07/2009,wherin the list of such designated individuals / entities have been given (copy of the said order dated 08/07/09 enclosed), they shall immediately, not later than 24 hours from the time of finding out such client, inform full particulars to the Joint Secretary (IS.I), Ministry of Home Affairs, at Fax No. 011- 23092569 and also convey over telephone on 011-23092736. The particulars apart from being sent by post should necessary be conveyed on e-mail id: isis@nic.in.

It is pertinent to mention that, besides the aforesaid, the Ministry of Home Affairs has separately issued an order dated 27/08/2009 to the regulators of the financial sectors, and to all the State Governments and UT Administrations, with regards to immovable property (copy of the order dated 27/08/09 enclosed).

[Note : Members may refer the Website of the Institute (www.icai.org) for the contents of the enclosures]

IMP UPDATE : RBI Guidelines [1 Attachment]

[Attachment(s) from Ashwin Nagar included below]

Dear All,

Please go through the attached Notice/ Circular issued by HDFC Bank post the communication from RBI for Banks on Guidelines to follow in case of alterations on cheques. This will get implemented from July 01, 2010.

As per RBI Circular - DPSS.CO.CHD.No. 1832/01.07.05/2009-10 dated 22nd February 2010

Prohibiting alterations / corrections on cheques :

No changes / corrections should be carried out on the cheques (other than for date validation purposes, if required). For any change in the payee's name, courtesy amount (amount in figures) or legal amount (amount in words), etc., fresh cheque forms should be used by customers. This would help banks to identify and control fraudulent alterations.

In view of the above guidelines, with effect from July 01, 2010 no alterations in cheque will be allowed (even if signature is made at the place of alteration on cheque). These kinds of altered cheques will not be honored by Bank.

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Attachment(s) from Ashwin Nagar

1 of 1 File(s)

Notice

ICAI MOU with CBEC- CFCs'

Tuesday, April 13, 2010
	Ministry of Minority Affairs
	ICAI TO BE A FACILITATOR OF FINANCE MINISTRY'S E-INITIATIVE SIGNS MOU WITH THE CENTRAL BOARD OF EXCISE AND CUSTOMS
	18:13 IST
	The Institute of Chartered Accountants of India (ICAI has signed a Memorandum of Understanding (MOU) with the Central Board of Excise and Customs (CBEC). Giving this information here today the President of ICAI, Shri Amarjit Chopra, said that under it the practicing members of ICAI will provide facility of e-filing of returns and documents to Central Excise and Service Tax assessees through Certified Facilitation Centres (CFCs). A CFC is a facility, other than the physical front offices or Facilitation centres of CBEC, which will be set up and operated by practicing Chartered Accountants in individual capacity or as proprietor or firm. With this the ICAI has become a facilitator of Finance Ministry's e-initiative. CBEC had introduced 'Automation of Central Excise and Service Tax' (ACES) programme to improve tax-payer services. ACES is a centralized web based application which enables the assessees to electronically interface with the department. It aims to reduce paperwork, transaction costs and increase accountability, efficiency and transparency. This initiative will immensely help all those assessees who may not have the requisite IT infrastructure / resources, to use ACES. An assessee is required to pay nominal fixed fees (maximum Rs 600/- for entering return data and Rs.200/-per return for uploading returns with ACES) for availing services of CFCs. With this MOU, the members can not only provide services as envisaged, but would also provide other services on request of the assesses. It opens a new professional avenue for the Members as they can now provide services to the assessees of Central Excise and Service Tax in filing their returns and other documents electronically under ACES. The Institute of Chartered Accountants of India), functioning under the aegis of the Ministry of Corporate Affairs, is in the process of setting up utility for online filing of application by members to obtain certificate under the scheme whereupon CBEC will provide user name and password to members to activate the facility. Members of the ICAI are spread across the country and this initiative will facilitate e-filing of returns and documents by assessees in every part of the country. -----------------------------------KKP/ska

Compliance Calender 2010 [1 Attachment]

[Attachment(s) from Ashwin Nagar included below]

Please find 2010 Compliance Calander for your ready reference. Forwarded to me by Mahavir Jain.

1 of 1 File(s)

Compliance

Is current Bank Audit Allotment Procedure Just, Fair and Transparent?

Are you disappointed with current Bank Audit allotment process? Let us discuss. Write your comments, compliants and suggestions on this wall.

Consolidated FDI Policy [1 Attachment]

Consolidated FDI Policy effective from 1st APril,2010- see attachment

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Attachment(s) from Ashwin Nagar

1 of 1 File(s)

fdi_circular_1_2010.pdf

Bank Branch Auditors List- RBI

List of Branch Statutory Auditors recommended for appointment by RBI for the year 2009-10. - (31-03-2010)

Members are hereby advised (i) not to make telephonic/e-mail enquiries at the offices of Reserve Bank of India and (ii) in case any error creeps in during data transfer or otherwise, the records available with Reserve Bank of India would be final. Further, as informed by RBI, "during the year 2009-10, the following 15 PSBs have exercised managerial autonomy in regard to selection and appointment of SBAs, viz. State Bank of India, Allahabad Bank, Bank of Baroda, Bank of India, Bank of Maharashtra, Canara Bank, Central Bank of India, Indian Overseas Bank, Oriental Bank of Commerce, Punjab National Bank, Syndicate Bank, UCO Bank , Union Bank of India, Punjab & Sind Bank and Andhra Bank. The names of audit firms recommended by these 15 banks and approved by RBI and the names of auditors forwarded by RBI to the 11 PSBs which have not opted for managerial autonomy for the year 2009-10 are also displayed in the list. The information in regard to branches allotted to these audit firms will be hosted by RBI on the web-site, after receipt of the information from the respective banks. RBI has advised Banks furnish the information regarding allocation of branches latest by April 30, 2010. While forwarding names of audit firms, banks have been advised that not more than three branches may be allotted per audit firm and that they should allot branches, to the extent possible, to the audit firms taking into consideration their category and audit experience in such a way that bigger branches are audited by larger/experienced audit firms. It is not necessary that all the audit firms whose names are forwarded by RBI to various banks are allotted branch audit by the respective banks, as sufficiently higher number of audit firms are forwarded to banks in order to enable them to allot audit assignments as per their logistic requirements. It also often happens that some of the audit firms whose names are forwarded are either not allotted any audit assignment or are allotted assignment by some other bank, after their names are returned back to RBI due to various reasons and re-allotted/ considered for re-allotment, if any, required by some other bank. " For the list, please click here

KYC Guidelines-Proprietary Concern

Date: Mar 26, 2010

Know your Customer (KYC) guidelines - accounts of proprietary concerns

RBI/2009-10/362 DBOD.AML.BC.No.80/14.01.001/2009-10 March 26, 2010 The Chairmen and Chief Executive Officers All Scheduled Commercial Banks excluding RRBs/ All India Financial Institutions/Local Area Banks Dear Sir, Know your Customer (KYC) guidelines - accounts of proprietary concerns A reference is invited to Para 2.4(a) of the Master Circular on KYC/AML/CFT/Obligation of banks under Prevention of Money laundering Act (PMLA), 2002 issued to banks vide DBOD.AML.BC.No.2/14.01.001/2009-10 dated July 1, 2009. It has been advised to banks that internal guidelines for customer identification procedure of legal entities may be framed by them based on their experience of dealing with such entities, normal bankers' prudence and the legal requirements as per established practices. If the bank decides to accept such accounts in terms of the Customer Acceptance Policy, the bank should take reasonable measures to identify the beneficial owner(s) and verify his/her/their identity in a manner so that it is satisfied that it knows who the beneficial owner(s) is/are 2.  For sake of clarity, in case of accounts of proprietorship concerns, it has been decided to lay down criteria for the customer identification procedure for account opening by proprietary concerns. Accordingly, apart from following the extant guidelines on customer identification procedure as applicable to the proprietor, banks / financial institutions  should  call  for and  verify  the  following documents before opening of accounts in the name of a proprietary concern: i) Proof of the name, address and activity of the concern, like registration certificate (in the case of a registered concern), certificate/licence issued by the Municipal authorities under Shop & Establishment Act, sales and income tax returns, CST/VAT certificate, certificate/registration document issued by Sales Tax/Service Tax/Professional Tax authorities, Licence issued by the Registering authority like Certificate of Practice issued by Institute of Chartered Accountants of India, Institute of Cost Accountants of India, Institute of Company Secretaries of India, Indian Medical Council, Food and Drug Control Authorities, etc. ii) Any two of the above documents would suffice. These documents should be in the name of the proprietary concern. 4. These guidelines will apply to all new customers, while in case of accounts of existing customers, the above formalities should be completed in a time bound manner and should be completed before December 31, 2010. 5.   Please acknowledge receipt. Yours faithfully, (Vinay Baijal) Chief  General Manager

--
Best Wishes

CA. V.M.V.SUBBA RAO
Chartered Accountant
Door No.24-2-1885,
I Floor, Flat No.5,
Siddivinayaka Residency, I Cross,
Central Avenue, MSR Nagar,
Magunta Layout,
Nellore-524 003
Andhra Pradesh
India
Mobile:+91 - 0 9390221100
          +91 - 0 9440278412
e-Mail: vmvsr@rediffmail.com
          vmvsr@yahoo.co.uk
http://pdicai.org/MyPage/203038.aspx

Materials on Bank Branch Audit for 2009-10 [1 Attachment]

[Attachment(s) from Ashwin Nagar included below]

Click attachment link below

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Attachment(s) from Ashwin Nagar

1 of 1 File(s)

REFERENCE

Bank Audit Engagement Letter- Word Format

Bank Audit Engagement Letter as suggeste by ICAI in Word Format-see attachment

The Branch Manager, Dt. /03/2010

Dear Sir,

Sub: Audit of accounts of your Branch for the year 2009-10 – Audit Engagement /Management Representations.

***

You have already been informed by your Management, that we have been appointed as the auditors to audit and report on the accounts of the Branch for the year 2009-10.

We have accepted the appointment, and we confirm that the audit shall be carried out in accordance with the applicable legal provisions and the regulatory requirements, besides the applicable authoritative pronouncements of the Institute of Chartered Accountants of India, with the objective of expressing an opinion on the Branch financial statements. For this purpose we will perform sufficient tests to obtain reasonable assurance as to whether the information contained in the accounting records and other source data is reliable and sufficient as the basis of the preparation of the financial statements; and whether the information is properly presented in the said statements.

You are aware that the responsibility for the preparation of the financial statements including adequate disclosure is that of the Management, and this includes the maintenance of adequate accounting records and internal controls, the selection and consistent application of appropriate accounting policies, including implementation of applicable accounting standards along with proper explanation relating to any material departures from those accounting standards. The management is also responsible for making judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Branch at the end of the financial year and of the profit or loss of the Branch for that period, and the safeguard of the assets of ;the Bank/branch.

We will conduct our audit in accordance with the auditing standards generally accepted in India and with the requirements of law. These Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatements. An audit includes examining, on test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by the managements, as well as evaluating the overall financial statement presentation. However, having regarding to the test nature of an audit, persuasive rather than conclusive nature of audit evidence together with inherent limitations of any accounting and internal control system, there is an unavoidable risk that even some material misstatements of financial statements, resulting from fraud, and to a lesser extent error, if either exists, may remain undetected.

In addition to our report on the financial statements, we expect to provide you with a separate letter concerning any material weaknesses in accounting and internal control systems which might come to our notice through the Long Form Audit Report (LFAR), or otherwise.

We also wish to invite your attention to the fact that our audit process is subject to 'peer review' under the Chartered Accountants Act, 1949 and the reviewer may examine our working papers during the course such review.

We wish to complete some audit procedures even prior to the year-end, depending on your readiness / response.

In view of the severe time constraints imposed, we are confident you will make available to us, within the dates stipulated, the following Branch returns / statements duly completed, pre-reviewed and duly authenticated, to enable us to furnish our reports in the form and manner desired of us by law or by the Reserve Bank of India and not necessarily in the form and manner prescribed by the Bank.

Statements / returns:

a) the Balance Sheet as at 31.03.2010

b) the Profit and Loss Account for the year 2009-10

c) the statements relating to the particulars of Advances as at 31.03.2010 and

d) other supporting returns / statements / annexures.

(including those covering also the LFAR requirements)

Information / clarification as stated in Annexure 'I' to this letter in connection with our assignment, may please also be expedited.

To enable us to monitor the progress of the audit and completion of the assignment, please indicate / mentioned, the actual dates(s) of completion as well as handing over to us of each statement / return / confirmation or other information required to be prepared by your (as per the contents of the letter of appointment sent to us), by your endorsement on each such statement / return / confirmation, before the same (duly authenticated) are handed over to us on 1^st April, 2010

We await your commitment.

As part of the audit process, we will expect to receive from the Management, written confirmation of the representations made to us and a written response (para-wise), to our requirements is imperative, and such response is to be based on your verification of facts.

We shall be greatful if your could confirmed the name(s) of the Officer(s) designated by the Branch to comply with our requirements in connection with the audit, so that our reports are expedited.

We shall appreciate your co-operation in the matter.

Thanking You

Yours faithfully

For Chartered Accountants

Proprietor / Partner

Membership No.

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CA. V.M.V.SUBBA RAO

RBI issues Revised Guidelines on Uniform Accounting for Repo/Reverse Repo Transactions

Date : 23 Mar 2010

RBI issues Revised Guidelines on Uniform Accounting for Repo/Reverse Repo Transactions

The Reserve Bank of India had today issued revised guidelines on Uniform Accounting for Repo/Reverse Repo Transactions.  The guidelines replace the guidelines issued in March 2003 which treated 'repo' as a combination of two independent sale/purchase transactions as per the legal provisions prevailing then. The accounting norms now propose to capture the economic essence of 'repo' as a collateralised lending/ borrowing transaction that is structured as a legal sale / purchase of securities as recognised by the RBI (Amendment) Act, 2006. The revision in the accounting norms would bring such transactions on to the balance sheet of the repo participants in its true economic sense, thus enhancing transparency. The salient features of the revised guidelines are: The revised accounting guidelines will apply to market repo transactions in government securities and corporate debt securities.  These accounting norms would, however, not apply to repo / reverse repo transactions conducted under the Liquidity Adjustment Facility (LAF) with the RBI. The securities sold under repo would continue to be reflected in the investment account of the repo seller and would be subject to the usual mark to market valuation discipline. Accordingly, the repo buyer would not reflect the securities acquired under repo in his investment account. The movement of securities should be accounted for in the books of the counterparties by showing it as contra entries for the sake of greater transparency. The regulatory treatment of market repo transactions in government securities will continue as hitherto, i.e., the funds borrowed under market repo will continue to be exempt from CRR/SLR computation and the security acquired under market reverse repo shall continue to be eligible for SLR.  The applicability of the CRR/SLR norms for repo transactions in corporate bonds will, however, be as per the guidelines issued vide IDMD.DOD.05/11.08.38/2009-10 dated January 8, 2010. The revised accounting guidelines for market repo will be effective from April 01, 2010. G.Raghuraj Deputy General Manager Press Release: 2009-2010/1278

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Best Wishes

CA. V.M.V.SUBBA RAO
Chartered Accountant
Door No.24-2-1885,
I Floor, Flat No.5,
Siddivinayaka Residency, I Cross,
Central Avenue, MSR Nagar,
Magunta Layout,
Nellore-524 003
Andhra Pradesh
India
Mobile:+91 - 0 9390221100
          +91 - 0 9440278412
e-Mail: vmvsr@rediffmail.com
          vmvsr@yahoo.co.uk
http://pdicai.org/MyPage/203038.aspx

Web based registration of Chartered Accountant firms for empanelment for Concurrent Audit assignment for the year 2010 - 11

Dear sir,                                                                                                   

 

 

Ref : Web based registration of Chartered Accountant firms for empanelment for Concurrent Audit assignment for the year 2010 - 11

 

We have pleasure in informing you that our Bank has invited online applications for empanelment for Concurrent Audit assignment for the year 2010 - 11. The registration for the same will be open on our website www.denabank.com from 25.03.10 to 15.04.10. The details of the same are available on our website .

 

This is for your information.

 

Dy. General Manager
Inspection and Internal Audit Department,
4th floor, 17, Horniman Circle, Fort,
Mumbai -23

Reference Material on Bank Audit [1 Attachment]

[Attachment(s) from Ashwin Nagar included below]

Dear Members,

Members are requested to please see the Reference Material on Bank Branch Audit (2009 - 2010) available on the Institute Website at http://www.icai.org/resource_file/18440ebookrmba.pdf

Regards,

Committee on Capacity Building of CA Firms
The Institute of Chartered Accountants of India

Click the attachement beolw to open it

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Attachment(s) from Ashwin Nagar

1 of 1 File(s)

Bank

Reference Material on Bank Audit

Dear Sir,
 
Members are requested to please see the Reference Material on Bank Branch Audit (2009 - 2010) available on the Institute Website at http://www.icai.org/resource_file/18440ebookrmba.pdf
 
Regards,
 
Committee on Capacity Building of CA Firms
The Institute of Chartered Accountants of India

--
Best Wishes

CA. V.M.V.SUBBA RAO
Chartered Accountant
Door No.24-2-1885,
I Floor, Flat No.5,
Siddivinayaka Residency, I Cross,
Central Avenue, MSR Nagar,
Magunta Layout,
Nellore-524 003
Andhra Pradesh
India
Mobile:+91 - 0 9390221100
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Additional Diclosures in Notes on Accounts ofBanks

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Date: Mar 15, 2010

Additional Disclosures by banks in Notes to Accounts

RBI/2009-10/347 DBOD.BP.BC.No. 79 /21.04.018/2009-10 March 15, 2010 The Chairmen/Chief Executives of All Commercial Banks (excluding RRBs) Dear Sir, Additional Disclosures by banks in Notes to Accounts The Reserve Bank has been taking several steps from time to time to enhance the transparency in the operations of banks by stipulating comprehensive disclosures in tune with the international best practices. On a review of the existing disclosures, it has been decided to prescribe the following additional disclosures in the 'Notes to Accounts' in the banks' balance sheets, from the year ending March 2010: Concentration of Deposits, Advances, Exposures   and  NPAs Sector-wise NPAs Movement of NPAs Overseas assets, NPAs and revenue Off-balance sheet SPVs sponsored by banks The prescribed formats are furnished in Annex. Yours faithfully (B.Mahapatra) Chief General Manager Annex I. Concentration of Deposits, Advances,  Exposures   and  NPAs   Concentration of Deposits (Amount in Rupees Crores)               Total Deposits of twenty largest depositors   Percentage of Deposits of twenty largest depositors to Total Deposits of the bank   Concentration of Advances* (Amount in Rupees Crores)              Total Advances to twenty largest borrowers   Percentage of Advances to twenty largest borrowers to Total Advances of the bank   *Advances should be computed as per definition of Credit Exposure including derivatives furnished in our Master Circular on Exposure Norms DBOD.No.Dir.BC.15/13.03.00/2009-10 dated July 1, 2009 Concentration of Exposures** (Amount in Rupees Crores)              Total Exposure to twenty largest borrowers/customers   Percentage of Exposures to twenty largest borrowers/customers to Total Exposure of the bank on borrowers/customers   **Exposures should be computed based on credit and investment exposure as prescribed in our Master Circular on Exposure Norms DBOD.No.Dir.BC.15/13.03.00/2009-10 dated July 1, 2009 Concentration of NPAs   (Amount in Rupees Crores)                       Total Exposure to top four NPA accounts   II: Sector-wise NPAs Sl. No. Sector Percentage of NPAs to Total Advances in that sector 1 Agriculture & allied activities   2 Industry  (Micro & small, Medium and Large)   3 Services   4 Personal Loans   III.  Movement of NPAs Particulars Amount in Rs. Crores Gross NPAs* as on 1st April of particular year (Opening Balance)   Additions (Fresh NPAs) during the year   Sub-total (A)   Less:-   (i)  Upgradations   (ii) Recoveries (excluding recoveries made from upgraded accounts)   (iii) Write-offs   Sub-total (B)   Gross NPAs as on 31st March of following year (closing balance) (A-B)   *Gross NPAs as per item 2 of Annex to DBOD Circular DBOD.BP.BC.No. 46/21.04.048/2009-10 dated September 24, 2009 IV. Overseas Assets, NPAs and Revenue Particulars Amount ( in Rupees Crores) Total Assets   Total NPAs   Total Revenue   V. Off-balance Sheet SPVs sponsored (which are required to be consolidated as per accounting norms) Name of the SPV sponsored Domestic Overseas

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Best Wishes

CA. V.M.V.SUBBA RAO
Chartered Accountant
Door No.24-2-1885,
I Floor, Flat No.5,
Siddivinayaka Residency, I Cross,
Central Avenue, MSR Nagar,
Magunta Layout,
Nellore-524 003
Andhra Pradesh
India
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Provisioning Requirement for Standard Assets

RBI/2009-10/337
RPCD.RRB.No.BC. 61/ 03.05.34/2009-10

March 4, 2010

All Regional Rural Banks

Dear Sir,

Provisioning Requirement for Standard Assets

Please refer to paragraph 2 of our circular RPCD.RRB.No.BC.97/03.05.34/2000-01 dated June 11, 2001 regarding provisioning requirements for 'standard assets'.

2. In this connection, a reference is invited to paragraph 158 of the Second Quarter Review of Monetary Policy for the year 2009-10 announced on October 27, 2009 (copy enclosed). It was proposed to increase the provisioning requirement for advances to the Commercial Real Estate (CRE) sector classified as 'standard assets' to 1.00 per cent with a view to building cushion against likely non-performing assets (NPAs). Accordingly, it has been decided to increase the provisioning requirement for advances to the CRE Sector classified as 'standard asset' to 1%. As regards other standard assets, it has been decided that while the provisioning requirements for direct advances to agriculture and SME sectors would remain unchanged at 0.25%, the same for all other loans and advances would be 0.40%.

3. The standard asset provisioning requirements for all categories, after the above changes, are summarised below.

Sr.No.	Category of standard asset	Rate of provisioning
(a)	Direct advances to Agriculture and SME sectors	0.25 %
(b)	Commercial Real Estate (CRE) sector	1.00%
(c)	All other loans and advances not included in (a) and (b) above	0.40%

4. Please acknowledge receipt to our Regional Office concerned.

Yours faithfully

(R.C.Sarangi)
Chief General Manager

Encl: 1

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Paragraph 158 of the Second Quarter Review
Of Monetary Policy for the year 2009-10

In view of large increase in credit to the commercial real sector over the last one year and the extent of restructured advances in this sector, it would be prudent to build cushion against likely non-performing assets (NPAs). Accordingly, it is proposed to increase the provisioning requirement for advances to the commercial real sector classified as 'standard assets' from the present level of 0.40 per cent to 1 per cent.

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CA. V.M.V.SUBBA RAO