Banking Current Affairs

Enter Your Email Address To Subscribe Current Affairs Daily Digest, Daily Quiz and other updates on Current Affairs:

Black Money: Automatic Information Sharing with Switzerland from 2019

Switzerland has ratified automatic exchange of financial account information with India and 40 other countries. This will facilitate Switzerland to share information about suspected black money with India and other 40 nations.

According to the Swiss Federal Council, the implementation of the exchange sharing agreement has been planned for 2018 and hence the first set of data is likely to be exchanged in 2019. The Swiss Federal Council is a top governing body of Switzerland. The exact date of automatic information exchange would be notified by the Swiss Federal Council soon as there were no procedural delays for the implementation.

However, the Swiss banks have started seeking new safeguards so as to protect the details of their clients against misuse that could expose them to crimes such as kidnapping or blackmail. So, the Swiss Council had stated that they will prepare a situation report before the first exchange of data. As per thr process, it will be ascertained whether the states and territories concerned have put in place a standard, especially those concerning confidentiality and data security. It will be assessed whether the democratic processes in these states and territories are robust or not and whether corruption is high or not etc.

Background

Switzerland has long been perceived as one of the safest havens for black money stashed abroad by Indians. The participation of Switzerland which is the world’s largest home for overseas wealth in the information sharing agreement would be a major boost in ending tax avoidance.

As a step towards fighting black money stashed abroad, ‘Joint Declaration‘ for implementation of Automatic Exchange of Information (AEOI) was signed between India and Switzerland on November 2016. Switzerland agreed for the introduction of the AEOI (Automatic Exchange of information) on tax matters under the guidance of G20, OECD and other global organisations.

AEOI, based on Common Reporting Standards, when implemented fully would put in place a system wherein bulk taxpayer information will be sent periodically from the source country of income to the country of residence of taxpayer. It would enable India to get access to information virtually from almost all the countries in the world including offshore financial centres.

Switzerland has said the AEOI will be implemented based on the Multilateral Competent Authority Agreement (MCAA) on the Automatic Exchange of Financial Account Information (AEOI). The MCAA is based on the international standard for the exchange of information developed by the OECD. India, on its part has promised to safeguard the confidentiality of the data received.

India joined the Multilateral Competent Authority Agreement on Automatic Exchange of Financial Account Information on 3rd June, 2015. According to the OECD, MCAA is a multilateral framework agreement that provides a standardised and efficient mechanism to facilitate the automatic exchange of information and avoids the need for the conclusion of several bilateral agreements.

Black money is that amount of money which is liable for taxation, but on which tax is not paid or evaded. It is usually received in cash from underground economic activity and, as such, is not taxed.

Tags:

AIIB Approves $150 million for India Infrastructure Fund

China-led Asian Infrastructure Investment Bank (AIIB) has approved $150 million equity investment loan to the India Infrastructure Fund. This loan will be the bank’s first equity investment to fund private projects.

Salient Highlights

The $150 million investment would go the India Infrastructure Fund. The Infrastructure Fund aims to invest in mid-cap infrastructure companies in India.

AIIB in total has approved two loans and one equity investment totalling $324 million to support infrastructure projects in India, Georgia and Tajikistan. In the case of Georgia and Tajikistan, the loans were approved to support transport and power projects.

The initiative is expected to benefit local infrastructure development as it will enhance private capital inflows from global long-term investors, such as public pension funds, endowments and insurance companies.

AIIB

AIIB is a multilateral development bank backed by China and is seen as a rival to the World Bank and Asian Development Bank (ADB). The bank started to function in January 2016. The bank was established to fund various infrastructure projects including energy, transportation, urban construction and logistics as well as education and healthcare in Asia-Pacific region.

The AIIB was officially established with 57 founding members. But as of May 2017, the bank has 52 members. It has an authorised capital of USD 100 billion. The bank is headquartered in Beijing.

Voting Share: China is the largest shareholder with 26.06% voting shares. India is the second largest shareholder with 7.5% voting shares followed by Russia 5.93% and Germany with 4.5%.

Tags:

Union Cabinet approves Proposal to introduce the Financial Resolution and Deposit Insurance Bill 2017

The Union Cabinet has approved the proposal to introduce a Financial Resolution and Deposit Insurance Bill, 2017 which will provide a comprehensive resolution framework for financial sector entities to deal with bankruptcy situation in banks, insurance companies, and other entities.

Salient Highlights

The bill will pave way for the establishment of Resolution Corporation. The Resolution Corporation would be mandated to protect the stability and resilience of the financial system; protecting public funds; protecting the consumers of covered obligations up to a reasonable limit.

Once enacted, the Financial Resolution and Deposit Insurance, Bill 2017 will result in repealing of the Deposit Insurance and Credit Guarantee Corporation Act, 1961 and repeal/amendment of other resolution related provisions in sectoral acts. With the repeal of Deposit Insurance and Credit Guarantee Corporation Act, 1961, the deposit insurance powers and responsibilities will be transferred to the proposed Resolution Corporation.

The new bill will complement the Insolvency and Bankruptcy Code, 2016  by providing a comprehensive resolution framework for the financial sector. The Insolvency and Bankruptcy Code, 2016 was enacted recently to deal with the insolvency of non- financial entities.

The bill envisages to inculcate discipline among financial service providers in the event of financial crisis. It is expected to maintain financial stability in the economy by limiting the use of public money to bail out distressed entities. It will put in place adequate preventive measures and at the same time proposes to provide the necessary instruments for dealing with an event of financial crisis

The bill is proposed to be enacted to strengthen and streamline the current framework of deposit insurance and to decrease the time and costs involved in resolving distressed financial entities.

Tags:

Advertisement

12345...102030...71