Global Fintech Fest 2023: IRDAI exploring flexible, do-it-yourself insurance products, says Chairperson Debasish Panda

 

During his address at the Global Fintech Fest 2023, Insurance Regulatory and Development Authority of India (IRDAI) Chairperson Debasish Panda said that the firm is pursuing reforms in the insurance sector in order to explore and offer flexible, do-it-yourself insurance products. “IRDAI is actively pursuing reforms in the insurance sector to enhance its adaptability and responsiveness. We are currently at a juncture marked by personalized offerings and shifting consumer preferences. To meet these changes, we are exploring flexible, do-it-yourself insurance products, leveraging advisory technologies and digital assistants. We anticipate a future where insurers can efficiently manage large and diverse data sources, harnessing quantum computing to revolutionize risk assessment and decision-making, thereby significantly improving the insurance lifecycle,” said Debasish Panda.

Debasish Panda discussed new technological developments lined up for the insurtech sector. He said, “AI algorithms combined with machine learning models and predictive analysis will be leveraged to make underwriting an essential process in the insurance industry. Process automation will help increase the speed of traditional processes that require manual intervention. Further, conversational AI will be harnessed in the insurance industry throughout the value chain and will help customers by assisting them during various stages of insurance procurement to claim process.”

Underlining his vision for the future of the sector, Debasish Panda said, “It is safe to say that smart contracts, parametric triggers and decentralised insurance would be the future. Simple, fast, automated and efficient – that is where we want to reach. Accessibility, availability, awareness, choiceness, healthy competition all led by technology is the way forward.” 

He also applauded India for its progress in the fintech sector. The session was moderated by Sarbvir Singh, Joint Group CEO, PB Fintech.

GFF 2023 is supported by the Ministry of Electronics and Information Technology (MietY), the Department of Economic Affairs (DEA), Ministry of Finance, the Reserve Bank of India (RBI), and the International Financial Services Centres Authority (IFSCA) and is organized by the Payments Council of India (PCI), Fintech Convergence Council (FCC), and National Payments Corporation of India (NPCI).

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Stocks To Watch: Kotak Bank, Infosys, ITC, Hindalco, Maruti Suzuki, Hero MotoCorp, Eicher Motors

 

Stocks in focus: GIFT Nifty traded 0.03% higher during Monday’s early trading session at 19,553, indicating a flat opening for domestic indices NSE Nifty 50 and BSE Sensex. On Friday, the Sensex closed above the 65,300 mark, while the Nifty topped 19,400 by close. Sectors like metals, energy, automotive, and banking all saw gains, whereas healthcare and pharmaceutical stocks faced some downward pressure.

“Domestic markets made significant gains, buoyed by favourable global cues, a higher-than-expected domestic manufacturing PMI, and positive GDP growth data. This robust economic outlook propelled key manufacturing sectors to lead the rally, while strong sales figures generated increased interest in auto stocks. The positive opening in global markets provided additional momentum for investor sentiment, particularly as US PCE inflation aligned with expectations,” said Vinod Nair, Head of Research at Geojit Financial Services.

Kotak Mahindra Bank

Uday Kotak has resigned as the managing director and chief executive officer of Kotak Mahindra Bank with effect from September 1, the bank said on Saturday in a regulatory filing. He will, however, continue as a non-executive director of the bank. 

IDFC First Bank

GQG Partners acquired a 2.6% stake in IDFC First Bank for Rs 1527 crore, according to bulk deals data from BSE. Cloverdell Investment, the primary public shareholder of the private bank, sold approximately 4.2% stocks at Rs 89 each.

Infosys

India’s second largest IT company Infosys announced that it has completed the acquisition of Danske Bank’s IT centre in India. 

Mindspace REIT

Mindspace Business Park REIT has acquired 0.24 million square feet (MSF) of leasable area at Commerzone in Porur, Chennai for a consideration of Rs 181.6 crore, including the transaction cost. The company said that the acquisition will help it to consolidate its ownership in the project

ITC

Diversified group ITC on Sunday said it will invest around Rs 1,500 crore to set up an integrated food manufacturing and logistics facility and a sustainable packaging products manufacturing facility at Sehore in Madhya Pradesh. The two projects spread over an area of nearly 57 acres will give a boost to agricultural and manufacturing sectors in Madhya Pradesh

Hindalco

Hindalco Industries has signed a shareholder’s agreement and power purchase deal with Seven Renewable Power, aiming to acquire a 26% share in SRPPL at a cost of Rs 32.5 lakh. Their objective is to create and manage a captive power facility that will consistently supply 100 MW of renewable energy to its smelter based in Odisha.

Maruti Suzuki, Hero MotoCorp, Eicher Motors

Auto manufacturers are releasing their sales figures for August. Traders will keep an eye on the following scrips.

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Reliance Industries, Shoppers Stop, Bharti Airtel, Suzlon Energy, Vodafone Idea, Paytm

Stocks in focus: GIFT Nifty traded 0.17% higher during Friday’s early trading session at 19,326, indicating a positive opening for domestic indices NSE Nifty 50 and BSE Sensex. The equity benchmarks closed in the red on Thursday, erasing all morning gains. After touching an intraday high of 19,584.45, the NSE index crashed over 1% or 200 points to settle at 19,386.70. Sensex settled lower by 180 points at 65,252.34.

“The US market exhibited a positive trend as declining US PMI ignited hopes of a prolonged rate pause, calming US bond yields. Optimism in the domestic market was more visible in the IT sector, though sentiments were reversed in other major sectors, likely influenced by the prevailing global uncertainties. Despite this, mid- and small-cap stocks demonstrated resilience, and the decline in bond yields facilitated a resurgence in foreign investor buying momentum,” said Vinod Nair, Head of Research at Geojit Financial Services.

Reliance Industries

Reliance Industries and The Oberoi Hotels and Resorts (Oberoi) entered an
understanding to jointly manage three properties across India and the UK. These include the upcoming Anant Vilas Hotel in Mumbai’s Bandra Kurla Complex, the Stoke Park in the UK, and another planned project in Gujarat. Additionally, Reliance Jio added over 2.27 million new customers to its existing telecom subscriber base.



Shoppers Stop

The MD and CEO of Shoppers Stop Venu Nair resigned, effective from 31 August due to personal reasons. Kavindra Mishra, the Homestop head, has been promoted as executive director and CEO for a period of three years in his stead.
Bharti Airtel

Bharti Airtel added 1.4 million customers to its telecom subscriber base at the end of June. Telecom subscriber base in the country grew marginally to 1,173.89 million on account of new customer additions.
Suzlon Energy

Suzlon Group announced a new order win for the development of a 31.5 MW wind power project for Integrum Energy Infrastructure Private Limited. “Suzlon will install 15 units of their S120 – 140m wind turbine generators (WTGs) with a Hybrid Lattice Tubular (HLT) tower and a rated capacity of 2.1 MW each in Maharashtra and Karnataka,” the company said in a regulatory filing.
Vodafone Idea

Vodafone Idea lost 1.28 million subscribers in the month of June, as Bharti Airtel and Reliance Jio gained the most subscribers. The monthly growth was mitigated by the loss of subscribers by state-owned BSNL, MTNL and Vodafone Idea
Kaynes Technologies

Kaynes Technology entered into an MoU with the Government of Karnataka. The company will set up a semiconductor assembly and testing facility through its step-down subsidiaries for a total consideration of Rs 3,750 crore.
Paytm

Promoter Antfin (Netherlands) Holding BV is likely to sell a 3.6% stake or nearly 23 million shares in One97 Communications, the parent company of Paytm, through a block deal on Friday. The transaction will be done at Rs 880.1 per share, or at a 2.7% discount to the last closing price.

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Stocks To Watch: Jio Financial Services, VI, Mphasis, Adani Energy, Piramal Enterprises, RITES

 

Stocks in focus: GIFT Nifty was 0.24% higher during Wednesday’s early trading session at 19,361.5, indicating a positive opening for domestic indices NSE Nifty 50 and BSE Sensex.  Domestic indices NSE Nifty 50 and BSE Sensex gave up their gains on Tuesday to end flat, continuing the range-bound trend. Nifty concluded just below 19,400, unable to breach the strong resistance level, landing at 19,396.45 with a marginal 0.01% gain. 

“Despite the support of positive international markets, Indian equities struggled to maintain their upward momentum due to lingering apprehensions over ongoing global uncertainties. Sectors closely tied to the Western economy, such as IT and pharma, faced challenges, while domestic-oriented sectors, alongside mid- and small-caps, exhibited resilience and gained traction,” said Vinod Nair, Head of Research at Geojit Financial Services.

Stocks to Watch on 23 August, 2023

Jio Financial Services

The share price of Jio Financial Services slid 5% on Tuesday, hitting its lower circuit for the second consecutive session due to worries about passive outflows. Additionally, the BSE announced that JFS’ removal from the indices will be deferred to 29 August. 

Brightcom Group

Sebi passed an interim order barring Brightcom Group (BGL) chairman and CEO Suresh Kumar Reddy and chief financial officer Narayan Raju from holding key managerial positions in any firm. 

Vodafone Idea

Vodafone Idea to clear about Rs 2,400 crore of dues to the government by September, according to PTI. The company recently cleared pending dues of licence fees and spectrum usage charges of about Rs 450 crore for the March quarter of 2022-23.

Mphasis

LIC’s shareholding in Mphasis rose from 94.1 lakh shares to 95.3 lakh equity shares. Its total stockholding jumped from 4.991% to 5.054% of the paid-up capital.

Adani Energy

Gautam Adani’s energy firm has been fined Rs 2.24 lakh by the BSE and NSE respectively as Adani Energy failed to comply with certain rules and regulations, “including failure to appoint a woman director.”

Piramal Enterprises

Piramal Enterprises’ board of directors approved the public issuance of non-convertible debentures up to Rs 3,000 in one or more tranches.

RITES

RITES emerged as the lowest bidder floated by the Railway board. The estimated order value is Rs 65.4 crore as RITES will do service testing and inspection of rails as per IRS T-12 2009 for Indian Railways.

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Tax concept: How is residential status determined for taxation by Income Tax Department in India?

 All resident individuals in India are required to pay tax on their income if it is above the basic exemption limit. According to a recent research report – ‘Salary Income: Tax Incidence and Optimisation‘ – published by RSM India, a tax consultancy firm, an individual is treated as a Resident of India in a financial year if s/he satisfies the following basic conditions:

Second, s/he is in India for 60 days or more during that financial year and has been in India for 365 days or more during last 4 years.

The report says that the above basic conditions are relaxed in the case of the following persons:

a) An Indian citizen who leaves India in any year for the purpose of employment or as a member of the crew of an Indian Ship

b) An Indian citizen or a person of Indian origin who resides outside India and who comes to India on a visit and whose total income (excluding income from foreign source) is up to Rs.15 lakh (1.5 million). Here the person of Indian origin means the person or either of his parents or either of his grandparents were born in undivided India.

The above-mentioned persons shall be treated as residents only if their total period of stay in India exceeds 182 days or more in the relevant financial year (i.e. 60 days shall be replaced as 182 days in the 2nd basic condition for determining whether a person is resident in India).

Resident and Ordinary Resident (ROR) vs Resident but Not Ordinarily Resident (RNOR)

The report further says that with effect from 1 April 2020, the 60 days limit has been replaced by 120 days in the second basic condition for an Indian citizen or a person of Indian origin who comes to India on a visit and whose total taxable income (other than income from foreign sources) is above Rs 15 lakh.

“As such, under the second basic condition, he will be considered as resident if he stays in India during the relevant financial year for 120 days or more and 365 days or more in the preceding 4 financial years and his Indian taxable income exceeds Rs. 1.5 million,” the report says.

However, if such person (having above Rs 15 lakh taxable income) stays in India during the relevant financial year for 120 days but less than 182 days then s/he shall be treated as Resident but Not Ordinarily Resident (RNOR) and his global income will not be subject to tax.

Further, if an individual does not satisfy any of the basic conditions altogether, s/he will be treated as a non-resident of India (NR) for that financial year.

In case an individual satisfies any of the basic conditions and is treated as a Resident then it is necessary to determine whether he is a “Resident and Ordinary Resident (ROR)” or “Resident but Not Ordinarily Resident in India (RNOR)”. For this purpose, the report says the person is required to check if s/he satisfies any one of the additional conditions listed below

“If he fulfills any of the above conditions, he will be considered as RNOR. If he fails to satisfy all the above conditions, then he will be treated as ROR,” the report says.

Deemed Resident under Section 6(1A) of Income Tax Act

Section 6(1A) of the Income Tax Act, which provides for “Deemed Resident” is applicable from the financial year commencing from 1 April 2020.

“An Individual being a Citizen of India having total Indian Income (i.e. income other than income from foreign sources) exceeding Rs 1.5 million, shall be deemed to be resident of India in any financial year, if he is not liable to tax in any other country or territory by reason of his domicile or residence or any other criteria of similar nature. However, such a person shall be treated as Resident but Not Ordinarily Resident (RNOR) and his entire global income will not be subject to tax,” the report says.

Who is liable for tax?

The Finance Act, 2021 has defined the term “Liable to tax” in relation to a person and with reference to a country. It means that “there is an income-tax liability on such person under the law of that country for the time being in force and shall include a person who has subsequently been exempted from such liability under the law of that country,” the report says.

The following flowchart provides an overview of the determination of Residential status:

A resident and ordinary resident is taxable in respect of his global income. Therefore, if an expatriate executive becomes resident and ordinary resident, then he will be taxable in India on his global income.

Income which is accruing or arising or deemed to accrue or arise in India is also taxable in the hands of all types of assesses, whether it be ROR, RNOR or NR.

Income received would constitute Income received for the first time. Thus, in case of any income which is received outside India but is subsequently remitted to India, the same would not constitute as receipt of Income.

Any income which is taxed on accrual basis and subsequently remitted to India would not be chargeable to tax at the time of remittance.

Salary income shall be deemed to accrue or arise in India, if the income is earned in India. In the following cases, salary income shall be regarded as earned in India only if the salary is payable for:

• service rendered in India; and
• the rest period or leave period which is preceded and succeeded by services rendered in India and forms part of the service contract of employment.

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Spike in inflation: RBI calls for reforms in perishables supply chain

 The Reserve Bank of India (RBI) on Thursday said retail inflation is expected to average well above its target band of 4%-6% in Q2FY24, and called for major reforms in the perishables supply chain to prevent recurrent price shocks.

To be sure, India’s consumer price index-based inflation rose to a 15-month high of 7.44% in July, primarily led by a rise in vegetable prices, especially those of tomatoes. This price shock came after inflation had cooled from its peak of 7.3% in Q1FY23 to 4.6% in Q1FY24.

The RBI’s monetary policy committee (MPC) earlier this month hiked its inflation forecast for current fiscal by 30 bps to 5.4% and for Q2, by 100 bps to 6.2%. It now looks that at least the Q2 forecast will be overshot.

“The vulnerability of the economy to recurring incidence of vegetable price shocks, especially ahead of and during the monsoon, warrants major reforms in perishable supply chains covering transportation networks, warehousing and storage technologies, and value addition processes that damp the amplitude of these swings,” the RBI said, in the monthly state of the economy report.

Stable prices for consumers, assured supplies and remunerative proceeds for farmers will follow when such reforms lead to efficiency and productivity gains, the report said.

Further, the report said that El Nino continues to pose macroeconomic risks over the second half of the current year and the outcome for food inflation in the Rabi season. Yet another upside risk, as per the report, is the outlook on crude oil prices that is marred by ‘engineered’ supply shortfalls.

It noted that the demand restraint exercised by monetary policy and supply augmenting measures are helping to offset price pressures considerably. In the absence of these policy responses, the inflation outlook would have been “far more adverse”.

Meanwhile, currency in circulation–the largest component of reserve money– decelerated to 4.2% as on August 4 from 8.2% a year ago, with 88% of the Rs 2,000 banknotes in circulation as on May 19 being returned as on July 31.

Scheduled commercial banks’ credit growth, excluding the impact of the merger of HDFC with HDFC Bank, moderated to 14.7% as on July 28 due to an unfavourable base effect and tapering of the momentum of credit offtake by industry, the report said. Despite a marginal dip, banks’ deposit growth remained strong at 12% excluding the impact of merger, as compared with 9.2% a year ago, it added.

The report noted that banks increased their 1-year median marginal cost of funds-based lending rate (MCLR) by 155 bps during May 2022 to July 2023. While lenders have completely passed on the repo rate hikes to their external benchmark-based lending rates (EBLRs), the weighted average lending rates (WALRs) on fresh and outstanding rupee loans have increased by 169 bps and 110 bps, respectively during May 2022 and June 2023.

Amidst robust credit demand, the weighted average domestic term deposit rates (WADTDRs) on fresh and outstanding deposits increased by 231 bps and 144 bps, respectively, during the same period. However, the transmission across bank groups during May 2022 to June 2023 has been uneven.

“The increases in the WADTDR on fresh rupee deposits and WALR on fresh rupee loans were higher in the case of public sector banks, while the increases in WADTDR on outstanding deposits and WALR on outstanding loans were higher for private banks,” the report said.

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Rupee to fall on surging US yields; 83/USD to be breached without RBI’s help

The Indian rupee is expected to decline on Monday on the back of a jump in U.S. yields, which boosted the dollar versus its major peers and Asian currencies.       Non-deliverable forwards indicate the rupee will open at around 82.92-82.94 to the U.S. dollar, compared with 82.8450 in the previous session.

The rupee last week was held in a narrow range, with the Reserve Bank of India (RBI) likely intervening to prevent the currency from dropping below the psychological 83 level.

“If RBI continues to sell, we could see the dollar rupee in the range of 82.60 to 82.90 (this week), else it may cross 83.00,” said Anil Bhansali, head treasury at FX advisory firm Finrex Treasury Advisors.

The 10-year U.S. yield climbed about 8 basis points (bps) on Friday and was marginally higher in Asia. At 4.18%, the 10-year U.S. yield is about 16 bps from October 2022 highs.

The increase in U.S. yields on Friday came despite a small downtick in the University of Michigan survey’s measure of long-run inflation expectations.

This indicated that “the movement in yields is more about supply”, ANZ said in a note. A wall of issuance in store over coming months has fuelled worries over supply and Fitch’s downgrade of U.S. debt has not helped, it said. Longer maturity yields in the U.K. and Germany soared on Friday as well.

“The current steepening pressure on yield curves has little to do with policy rate expectations and warrants watching.” ANZ added.

Asian currencies were down between 0.2% and 0.6% to begin the week. The offshore Chinese yuan dropped to 7.2775 to the dollar, the lowest in one-and-a-half months.

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