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<keyword id="20599258" type="General" weightage="20" keywordseo="Indian-consumers" source="keywords">Indian consumers</keyword> demonstrated a significant increase in their <keyword id="21084888" type="General" weightage="100" keywordseo="credit-card-spending" source="keywords">credit card spending</keyword> in July this year, marking a 19% increase compared to the same month last year. According to a report released by <keyword id="19945737" type="General" weightage="20" keywordseo="SBI-Securities" source="keywords" meta.keywordsubtype="org" meta.entityname="SBI Securities" meta.hostid="261" meta.entityid="SBI Securities">SBI Securities</keyword>, the total expenditure by credit card users across the country reached an impressive Rs 1.7 trillion. This substantial uptick highlights the growing reliance on credit cards for transactions, reflecting broader economic trends and <keyword id="20740758" type="General" weightage="20" keywordseo="consumer-confidence" source="keywords">consumer confidence</keyword>. The report also highlighted a considerable increase in <keyword id="21118324" type="General" weightage="20" keywordseo="transaction-volumes" source="keywords">transaction volumes</keyword>, which surged by 39% year-on-year, reaching a total of 38.4 crore transactions in July 2024. This increase in the number of transactions underscores the widespread adoption and usage of credit cards as a preferred <keyword id="20632158" type="General" weightage="20" keywordseo="payment-method" source="keywords">payment method</keyword> among Indian consumers. "Credit card spending in India increased 19% YoY to Rs 1.7 trillion in Jul'24. The transaction volume during the month was 38.4 crore, up 39% YoY" said the report. The report also noted that among the banks, <keyword id="19895995" type="General" weightage="20" keywordseo="HDFC-Bank" source="keywords" meta.keywordsubtype="org" meta.entityname="HDFC Bank" meta.hostid="261" meta.entityid="HDFC Bank">HDFC Bank</keyword> emerged as the leader in terms of transaction volumes, with its credit cards facilitating 9.9 crore transactions during the month. <keyword id="19900482" type="General" weightage="20" keywordseo="ICICI-Bank" source="keywords" meta.keywordsubtype="org" meta.entityname="ICICI Bank" meta.hostid="261" meta.entityid="ICICI Bank">ICICI Bank</keyword> followed closely with 7.1 crore transactions, while SBI secured the third position with 6.3 crore transactions. In terms of transaction value, HDFC Bank again led the way, with a total spend of Rs 44,369 crore through its credit cards in July. ICICI Bank and SBI followed with Rs 34,566 crore and Rs 26,878 crore, respectively. The report said "In Jul'24, transaction volumes was led by cards issued by HDFC Bank (9.9 crore) followed by ICICI Bank (7.1 crore) and SBI (6.3 crore)". Additionally, the <keyword id="22988051" type="General" weightage="20" keywordseo="average-transaction-value" source="keywords">average transaction value</keyword> (ATV) also saw a marginal increase of 1.4% month-on-month in July 2024. This marks the first increase in ATV in ten months, suggesting a shift in consumer behaviour towards higher-value transactions after a period of stagnation. Overall, these figures reflect the growth of credit card usage in India, driven by increased consumer confidence and the convenience offered by credit card transactions.

Indians credit card spending increases 19% YoY to Rs 1.7 trillion in July 2024

In its next meeting, slated for 9th September, the GST (Goods and Services Tax) Council may decide over imposing an 18% charge on <keyword id="20157806" type="General" weightage="20" keywordseo="payment-aggregators" source="keywords">payment aggregators</keyword> (PAs) like <keyword id="20290089" type="General" weightage="20" keywordseo="Razorpay" source="keywords">RazorPay</keyword>, Stripe, PayU, Pine Labs, and more. Reportedly, these charges will be levied on small value transactions of up to Rs 2,000, which are made via <keyword id="22719132" type="General" weightage="20" keywordseo="debit-and-credit-cards" source="keywords">debit and credit cards</keyword>. Until now, all payment aggregators were exempt from GST on all transactions up to Rs 2,000. We decode what it means for you, and how it will impact your pockets. What's happening? The <keyword id="22666613" type="General" weightage="20" keywordseo="fitment-committee" source="keywords">fitment committee</keyword>, which is made up of revenue officials from both center and states, is considering levying an 18% GST on payment aggregators. This is because officials feel that PAs are mere facilitators and intermediaries for card-based transactions, unlike banks, and thus, should be brought under GST purview. At present, they are exempt on paying GST on transaction of value less than Rs 2,000. But, if the proposal goes through in the 54th <keyword id="19994390" type="General" weightage="100" keywordseo="GST-Council" source="keywords">GST Council</keyword> meeting, every transaction you make through your credit or debit cards going ahead via such PAs will become costlier. Who are payment aggregators? PAs are essentially third-party service providers that let customers pay, and allow businesses to collect payments made via UPI, credit/debit cards or more. They are the interface between the customers and the merchants, allowing customers to opt for multiple, secure payment options, and also letting merchants manage and track fund collections and refunds. For their services, PAs levy a payment gateway fee, which ranges between 0.5% to 2% for each transaction. Post demonetisation in 2016, when currency notes of Rs 500 and Rs 1,000 were discontinued with immediate effect, the government had waived off taxes on credit and debit card transactions of up to Rs 2,000, in order to boost digital payments. If GST is levied, PAs are likely to pass on this cost to merchants. Will UPI be affected? No. Currently, UPI does not currently have a MDR, or merchant discount rate. UPI will continue to remain a lucrative option for PAs and merchants, especially for transactions under Rs 2,000, since they will not attract GST. PAs charge MDR to businesses for processing credit and debit card transactions on their behalf. What will change? The move is likely to affect small businesses the most, who thrive on multiple, low value transactions. Think of this. Say you make a payment of Rs 1,500 via your credit card on Razorpay. If the PA sets its fee at 1% of each transaction, the business will have to pay Rs 15 to the PA. But now, with the potential additional 18% GST applicable, the business will have to pay Rs 2.7 more, or about Rs 17.7 to these PAs. This might not seem much at first, but compounded over multiple transactions, might snowball into a significant cost for small businesses.

GST Council mulling 18% GST on low value transactions made via RazorPay, PayPal and more. Here's how it will impact you

<ul class="summary-list"><li>Mark Cuban continued his criticism of former President Donald Trump in a recent interview.</li><li>The billionaire said Trump is "the most unethical" person he had ever done business with.</li></ul>Mark Cuban has a take on why former President Donald Trump has some big backers out in Silicon Valley — and it has a lot to do with Trump's character, he said.The billionaire investor and "Shark Tank" star discussed Trump's politics in an <a target="_blank" class="" href="https://www.youtube.com/watch?v=QqDPrv8oFyY">interview</a> with YouTuber Brian Tyler Cohen earlier this week, telling the progressive commentator that Trump is "the antithesis" of someone with good character."I think they believe they can manipulate him. I think they understand that he's so transactional and so devoid of core values that anything that they want they can manipulate him to get," Cuban said of Silicon Valley backers of Trump.During his interview with Cohen, Cuban added that he thinks Trump is "the "most unethical" and "dishonest" person he's ever worked with or done business with. It's unclear what business Cuban is referring to.Cuban added that he believes a president needs to have character and empathy, and who is "ethical when it comes to making difficult decisions.""I can't even imagine why people consider Donald Trump because of his lack of character and ethics," Cuban said.Tesla chief <a target="_blank" class="" href="https://www.businessinsider.com/elon-musk-learned-lesson-twitter-x-kamala-harris-donald-trump-2024-9">Elon Musk</a>, who Cuban <a target="_blank" class="" href="https://www.businessinsider.com/mark-cuban-asking-elon-musk-post-up-x-source-code-2024-8">often spars with on X</a>, is now one of Trump's biggest supporters. Musk endorsed Trump after the former president survived an assassination attempt and has expressed interest in serving on a possible government <a target="_blank" rel="" class="" href="https://www.businessinsider.com/donald-trump-wants-elon-musk-on-his-cabinet-2024-8">efficiency commission should Trump win the election.</a>Cuban also has a theory on why Musk wants to get on the Trump train."If you're the wealthiest person in the world and you have control, effective control — you're the puppet master of the president, the most powerful person in the world?" Cuban said. "Oh my god, that's about as intoxicating — that is the definition of power corrupts, but absolute power corrupts absolutely.""I mean, I would — if I had the same goal, I wouldn't care about my EV sales, right? I wouldn't care about my Starlink sales," Cuban added.To be sure, this isn't the first time Cuban has speculated on his Silicon Valley peers' motivations for backing Trump.In August, Cuban said he thought the tech bros who supported Trump were out for world domination."Watching what's happening in Silicon Valley is insane. It's not so much a support thing. It's more like a takeover thing, trying to put themselves in a position to have as much control as possible," Cuban said in an <a target="_blank" rel=" nofollow" class="" href="https://x.com/TheDailyShow/status/1823177433639505969">interview</a> with the "Daily Show" host <a target="_blank" rel="" class="" href="https://www.businessinsider.com/jon-stewart-biden-looked-like-resting-25th-amendment-face-2024-6">Jon Stewart.</a>"They've gotten to the point now where they feel like they should control the world right and that there should be a CEO in charge of everything because they are rich as fuck," Cuban added during his interview with Stewart.<h2 id="abb68b15-63ee-4092-b873-19d85c9781ec">Cuban's doubts about Trump go beyond business</h2>Cuban has endorsed <a target="_blank" class="" href="https://www.businessinsider.com/mark-cuban-kamala-harris-only-candidate-in-founder-mode-2024-9">Vice President Kamala Harris</a> in the upcoming election and has been increasingly vocal about his distaste for Trump in recent months.The businessman has repeatedly railed against many of Trump's plans. That includes Trump's proposed <a target="_blank" class="" href="https://www.businessinsider.com/trump-tariff-trade-tax-proposal-inflation-interest-rates-outlooks-predictions-2024-7">tariffs</a>, which Cuban has said would be disastrous for <a target="_blank" class="" href="https://www.businessinsider.com/mark-cuban-donald-trump-tariffs-inflation-trade-war-small-business-2024-9">businesses</a>.Cuban's also dislike for Trump goes beyond business. In the Monday video, Cuban accused Trump of bigotry, specifically citing the former president's promotion of baseless claims that <a target="_blank" class="" href="https://www.businessinsider.com/jd-vance-haitian-immigrants-ohio-eating-pets-trump-2024-9">Haitian immigrants</a> in Springfield, Ohio, are eating pets."That's the Roy Cohn school of management," Cuban said, referring to <a target="_blank" class="" href="https://www.businessinsider.com/roy-cohns-influence-donald-trump-king-intimidation-2016-12">Trump's former mentor</a>, the infamous McCarthy-era lawyer. "You demonize, demonize, demonize."But Cuban didn't always feel this way. In an August interview with former Republican presidential candidate Vivek Ramaswamy, Cuban said he actually <a target="_blank" class="" href="https://www.businessinsider.com/mark-cuban-supported-trump-until-know-him-better-2024-8">started out supporting Trump</a>, thinking the businessman could shake up politics. But after digging into Trump's business records, Cuban said he changed his mind."The bigger point is Trump University. <a target="_blank" class="" href="https://www.businessinsider.com/trump-soho-has-a-sordid-history-highlights-photos-2017-11">Trump SoHo</a>. Stole $4 million from a friend of mine that had to sue to get it back. Mike Pence," Cuban listed off, referring to the former president's troubled <a target="_blank" class="" href="https://www.businessinsider.com/trump-university-settlement-focus-country-2016-11">real-estate training program</a>, luxury hotel, and <a target="_blank" class="" href="https://www.businessinsider.com/trump-called-pence-pussy-for-certifying-biden-electoral-vote-win-2021-11">broken relationship</a> with his vice president.Earlier in March, Cuban also told <a target="_blank" class="" href="https://www.axios.com/2024/03/05/mark-cuban-biden-endorsement-trump-snake-oil">Axios</a> that he would rather vote for President Joe Biden than a "snake oil salesperson.""One will tell you his snake oil will cure everything that ails you. The other will show you the details of his policies through charts, graphs, and statements," he said.Still, <a target="_blank" class="" href="https://www.businessinsider.com/mark-cuban-donald-trump-i-dont-hate-him-at-all-2024-9">Cuban denied "hating" Trump</a> earlier this month, responding to a user on X."I just think he was and would be a lousy president," Cuban wrote.Cuban told Cohen that whoever holds the presidency needs to have good character to handle whatever problems will inevitably arise."You want somebody who is ethical when it comes to making difficult decisions," Cuban said. "I can't even imagine why people consider Donald Trump because of his lack of character and ethics."Cuban, Musk, and representatives for Trump did not immediately respond to a request for comment from Business Insider.

Mark Cuban says Trump's billionaire backers know they can manipulate him because he's 'so transactional, and so devoid of core values' 

<div type="image" title="For the unversed, trading in futures and options can be akin to setting their hard-earned money on fire" height="900" width="1200" msid="114064202" hostid="261" caption="&amp;lt;p&amp;gt;For the unversed, trading in futures and options can be akin to setting their hard-earned money on fire&amp;lt;/p&amp;gt;"></div> Once upon a time, there thrived a wild, wild land. Here, it was all about super high monetary stakes, lightning-fast trade deals, and bucketloads of money shifting hands every single second. This wilderness lured millions of individuals with the promise of super duper high returns. But, at what cost? Welcome to the unforgiving, ultra-risky wild west of <keyword id="19991165" type="General" weightage="20" keywordseo="Indian-equity-markets" source="keywords">Indian equity markets</keyword> called the <keyword id="145718" type="General" weightage="100" keywordseo="Futures-and-Options" source="Orion">futures and options</keyword>. Here, everyone seems to just fly right through the bright red-flagged warnings of financial risks to earn even a fraction of these promised returns. Most burn themselves in the process, but carry on nevertheless, as if nothing ever happened. <h2>Chasing the cloudy profits</h2>The data conclusively proves that every 9 out of 10 individuals only lost their hard-earned money in this land. But hey, what do the numbers know? Some hide their losses out of shame, some out of fear. The proponents, meanwhile, proudly boast unusually high returns on their investments, some open social media channels while others encourage their friends and family to take the plunge. Naturally, news of this unstoppable and humongous en-masse migration to the F&amp;O (futures and options) town has reached sheriff <keyword id="19901201" type="General" weightage="20" keywordseo="SEBI" source="keywords" meta.keywordsubtype="org" meta.entityname="SEBI" meta.hostid="261" meta.entityid="SEBI">SEBI</keyword>, galvanising them into action. After all, it was time to put a leash on this madness and save the common man. The inhabitants of this town doubled in the last 2 years, from 51 lakh in FY22 to 96 lakh in FY24—99.8% of whom were small and mid-income traders. But profits? Well, that's a different, rather completely absent story. <h2>Que Sera Sera, much?</h2>A recent report by SEBI (Securities and Exchange Board of India) that studied profits and losses made by traders in the equity derivatives segment between FY22-24 exposed the mad mania of futures and options trading in India, especially since the pandemic. Per the report, 91.1% of individual traders, or about 73 lakh traders had only lost money trading in futures and options in FY24. Between FY 22-24, over 1 crore traders, or about 92.8% of individual traders, had lost Rs 2 lakh each. But once bitten, twice shy? Well, not in this case. More than 75% of individuals, who had only made losses trading in F&amp;O in FY22 and FY23, continued to trade vigorously in FY24 as well, without any changes in the bottom line, which remained deep in red and negative. So, then all these traders must be uber-rich, with tons of cash and not much care to spare? Nope. 76% of traders in the F&amp;O space in FY24 had an annual income of less than Rs 5 lakh. 2 years ago, their share stood at 71%. And their choice of poison? Options! In FY24, 60% of traders made losses trading in futures, but a whopping 91.5% burnt their funds trading in options. Mind you, futures are riskier than options. With futures, which require significant capital investment, the buyer and seller both are contractually bound to adhere to the pre-determined strike price of the futures or options contract, irrespective of whether the prevailing prices are higher or lower (and thus, resulting in losses for either the buyer or seller). With options, since this adherence ain't necessary, individuals end up taking debt to take highly leveraged positions while trading here. <h2>Scale of the explosion</h2>Anyone who trades even infrequently will tell you that a demat account is the mitochondria or powerhouse of the trading cell. As of August 2024, India had over 17.1 crore <keyword id="20957284" type="General" weightage="20" keywordseo="demat-accounts" source="keywords">demat accounts</keyword>, which are a prerequisite for trading in the markets. India is the 9th biggest country in the world, in terms of total demat accounts. Did you know that our demat accounts are at par with the entire population of Bangladesh? Talk about scale! Just 4 years ago, in March 2020, this number was a mere 4 crore. Naturally, the total F&amp;O turnover on both <keyword id="20004725" type="General" weightage="20" keywordseo="NSE" source="keywords" meta.keywordsubtype="org" meta.entityname="NSE" meta.hostid="261" meta.entityid="NSE">NSE</keyword> and BSE has hit the roof, and also broken it. As of October 4, 2024, the total futures and options turnover on NSE stood at a massive Rs 4,78,27,27,750.30 crore. Good luck counting the thousands! <table style="border-width: initial; border-style: none;" class="redcator-table-advance"></colgroup><tbody><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Year </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Total Turnover (Both Futures and Options) (In Rs Crore) </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">2020-21 </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">64,36,03,951.51 </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">2021-22 </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">1,69,52,33,134.47 </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">2022-23 </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">3,82,23,26,468.06 </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">2023-24 </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">7,99,27,67,152.43 </td></tr></tbody><tbody></tbody><tbody></tbody><tbody></tbody></table>Source : NSE Another metric that underlines the meteoric growth of trading in India is the collection of STT or <keyword id="20930760" type="General" weightage="20" keywordseo="Securities-Transaction-Tax" source="keywords">Securities Transaction Tax</keyword>. As of September 2024, India's STT mop-up had gone past Rs 26,000 crore. Traders have to pay STT whenever they buy or sell any security in the market. So, more trading brings in more STT, and hence, more revenue for the government, so they're not really complaining. After all, this is certainly what they'd call enviable growth. As of August 2023, our STT collection stood at about Rs 21,599 crores. And in FY20-21, India's STT collection had been Rs 16,000 crore. If only our salaries also managed to grow at this rate! <h2>So, what's happening?</h2>Two things. One, it's the big bulls who are raking in all the moolah. And it's the younger lot (those aged under 30) who are propping them up for this. In FY24, 43% of individual traders in the market were less than 30 years of age. In just one year, this number has swelled by 12 percentage points from just 31% of individual traders. But who says ageing is bad? Wrinkles and silver hair seemingly have a propensity of incurring lesser losses in the market. In FY24, only 79% of traders aged above 60 years made losses, as compared to 93% of those aged below 30. Small and mid-income traders, which make up 98% of the total trader base, witnessed average losses per person of Rs 65,000 and Rs 1.5 lakh in FY24 in futures and options, respectively. The winner here? Clearly, the big bulls, who declared an annual income of over Rs 1 crore, ended up with average profits of Rs 96,000 per person this year. <h2>What’s the sheriff up to?</h2>The government has finally swung into action, hiking the STT rate for F&amp;O during this year’s budget. Effective October 1, 2024, the STT on futures stands at 0.02%, up from 0.0125%. For options, it was upped to 0.1% versus 0.0625% previously. Small margins, but huge impact oncoming. Says Puneet Sharma- CEO and Fund Manager at Whitespace Alpha, “SEBI aims to enhance market stability while safeguarding investor interests, reflecting the regulator's intent to balance risk management with market participation”. But this might come with its own share of challenges, too. “Stricter norms around leverage, transparency, and capital adequacy could limit the ability of investors to determine their own risk appetite, thereby stifling innovation in trading strategies. Over-regulation in an environment that thrives on strategic flexibility and creativity could dampen the market’s dynamism, affecting India's competitiveness in the global derivatives landscape”, he observes. SEBI recently came out with a set of guidelines that aim to thwart <keyword id="19972907" type="General" weightage="20" keywordseo="retail-investors" source="keywords">retail investors</keyword>' participation in futures and options and hinder them from taking undue risks. Here's a quick recap of what's to come for the residents of the F&amp;O town Margin Requirements: To battle the high volatility and chaos which is generally seen on expiry days(i.e the last mandated date, post which an option becomes invalid), SEBI will put in place an extreme loss margin (ELM) of 2% for all open short options on the day of expiry. Translation? Traders will need to pony up more cash upfront, leaving them with fewer funds to take on risky bets. It ain't a choice: No more of one expiry every single day! Going ahead, an exchange like BSE or NSE will just be able to offer weekly expiries, that too, only on one benchmark index, as opposed to an entire buffet it currently offers. At present, NSE offers weekly options contracts for its financial index, bank and midcap indices. But say goodbye to this, and hello to derivatives on only 1 index per exchange. Raising the bar: Effective November 30, 2024, the minimum contract value for index derivatives will be upped to Rs 15 lakh, from the present Rs 5-10 lakh. The hope is that by making it ultra-expensive to enter these trades, investors will be dissuaded from taking on risky trades. Pay upfront: Starting February 2025, those trading in options will have to pay the entire options premium upfront, even before their trades are executed. This is because options generally carry very high leverage, and paying a significant sum upfront can force traders to think twice. Invigilation Pro Max: Starting April 1 2025, to make sure that the number of positions for equity index derivatives does not slyly slip over the mandated limit, especially on expiry days when trade volumes are huge, the exchanges will have to take a minimum of 4 position snapshots randomly. The question is, will these injections of sobriety be enough to calm down the steroid-fed bull of the futures and options market in India? Well, only time and market turnover will tell! For more insights into the financial markets and business news, stay tuned to our site and social media handles. And don’t forget to subscribe to Business Insider India’s newsletters for your weekly dose of Simply Put! Disclaimer: The content on this website is for informational purposes only and should not be construed as investment advice. We recommend readers consult certified, qualified and registered advisors for professional and personalised financial advice.

SIMPLY PUT: SEBI is on a mission to take on the wild, wild west of futures and options in India. Here’s why, what, and how

Over the past few months, there’s been a lot of brouhaha about the lagging pace of bank deposits in India. Simply put, the rate at which Indians are depositing their hard-earned money in banks has been falling constantly, and some blame the increasing financialization of household savings in the country, or the rising preference of Indians towards mutual funds and shares. So, the hypothesis is that people are choosing to invest more in mutual funds and the Indian equity markets through direct investments, IPOs, or NFOs, the money flowing into Indian banks in the form of deposits is slowing down. But is that really the case? <h2>A crisis or a phase?</h2><keyword id="19899808" type="General" weightage="20" keywordseo="rbi" source="keywords">RBI</keyword> data suggested that for the quarter ended June 2024, bank deposits grew at 11.7%. On the other hand, credit growth has outpaced this at 15%. This means that the outflow from banks as loans is far greater than the inflow into them in the form of deposits in Q1 of FY 2024-25. The situation largely saw cut-copy-paste in the first week of September as well, with loans registering a 13.3% YoY growth during the period, while deposits rose only 11.1%. This gap has only been widening for the last 3 years. Since deposits are how banks gather assets to further lend and earn interest income as a consequence, even a slight dip could set the alarm bells ringing for banks, and rightfully so. And truth be told, mutual funds are indeed taking on bank deposits in a big way. Per a report by <keyword id="20250971" type="General" weightage="20" keywordseo="franklin-templeton" source="keywords">Franklin Templeton</keyword>, in August 2024, the AUM (assets under management) of Indian mutual funds, or the total funds managed by them, stood at 31.3% of total bank deposits in the country, up from 24.20% during the year-ago period. As of August 2024, the AUM of mutual funds stood at Rs 66.17 lakh crore, an all-time high. But all said and done, is this really the reason why the rate of bank deposits is falling behind? SBI has dismissed this to be a “statistical myth”, and experts point out that since equity and fund houses also keep the cash in their respective bank accounts, there’s no cause for concern. So, is financialization really to be blamed for the trailing tempo of deposits? Or is something else happening behind the scenes? We take a closer look: <h2>First, are <keyword id="4000333" type="General" weightage="100" keywordseo="household-deposits" source="Orion">household deposits</keyword> really slowing down? And is that a cause of concern?</h2>Data from Motilal Oswal suggests the contrary. Deposits grew by around 10.4% between March 2020 and August 2024. Data from RBI also highlights that as of August 9, 2024, bank deposits witnessed a YoY growth of 10.8%. The loan-to-deposit ratio for the retail segment, which indicates what percentage of its total deposits the banks lend out as loans, has stayed at 77.5%, above the 77% mark for the tenth straight month. Also, we can’t forego the fact that the share of Indian <keyword id="20319599" type="General" weightage="20" keywordseo="households" source="keywords">households</keyword> in bank deposits has indeed slowed down. However, data from Axis AMC shows that the dip is marginal—from 63% in 2022 to 62% in 2023 and 61% in 2024. What has slowed down even more considerably is the share of government deposits in the aggregate bank deposits, which has dipped from 14% in 2018 to 9% in 2024. So, it's not just household deposits, you see. Moreover, as of March 2024, the collective CASA ratio (current and savings account deposits) of all commercial banks in India stood at 41.00%, down from 43.1% in March 2023 and 45.2% in March 2022, marking a nearly 5% point decline over the past year, while still staying over the 10-year average of 39.2%. This implies that Indian banks are relying more on higher-cost funds (savings accounts), which can limit their profitability. <h2>What is this financialisation of savings we are talking about?</h2>Then again, there is no doubt about the growing affinity of Indians towards mutual funds and stock markets. Recent data from CBDT (<keyword id="19942037" type="General" weightage="20" keywordseo="central-board-of-direct-taxes" source="keywords">Central Board of Direct Taxes</keyword>) highlights that India’s net direct tax collection surged by around 22%, driven exclusively by the significant uptick in the collection of <keyword id="20930760" type="General" weightage="20" keywordseo="securities-transaction-tax" source="keywords">Securities Transaction Tax</keyword> (STT), which doubled to Rs 26,154 crore, from Rs 13,352 crore in the year-ago period. Why does this matter? STT is levied when you buy or sell equity shares on stock exchanges, sell equity mutual funds, and trade in futures and options in the equity segment. Such taxes, including the multiple other taxes in equity market investments, are considered as leakages as the money moves out of the economy into government coffers. Data from a ValueQuest report explains that over the last 20 years, the markets have handsomely rewarded the investors, generating over $900 billion in incremental value for them. This is the major driver behind the dramatic rise in investment flowing towards the equity markets. There’s further proof of this budding romance, if you check the demat pudding. The number of demat accounts, which are a primary requisite for participating in the stock markets, also burgeoned by 42.3 lakh in August 2024, taking India’s total tally of demat accounts beyond 17 crore. To put this in perspective, this is almost equivalent to the population of just 8 nations in the world, including China, the US, Brazil and more. Vivek Iyer, Partner, Grant Thornton Bharat thinks it's rather important, as well. “Financialisation of household savings in India is an indication of deepening capital markets in the market, especially from a retail investor standpoint. Bank deposits with a modest rate of return are no longer the only option for savings for investors. Investors today have more avenues for wealth creation in the form of public capital markets, which have democratized wealth creation and provided equality of opportunity to retail investors”, he says. Yes, Indians are investing more and more in the markets, and in mutual funds. But is it a sin to look out for inflation-beating returns, which the stock markets offer, and vanilla bank deposits don't? After all, the allure of 12-13% annual returns offered by equities can certainly pale the stability offered by good old deposits, which generally do not go beyond 9% when it comes to annual returns. But all of this is not what is behind the slowdown. India is still a toddler in the school of savings financialization, with less than 10% of the population holding a demat account, and less than 5% of us saving in equities. That's a drop in the ocean of deposits, far inadequate to trigger a tsunami. <h2>Tell me why lagging deposits have nothing to do with Indians investing more in mutual funds!</h2>Says Shweta Rajani, Head - Mutual Funds, Anand Rathi Wealth Limited, “Households' equity holdings composition grew from 11.1% in FY 23 to 14.7% in FY 24. This trend reflects a growing awareness of investment options, empowering individuals to take control of their financial futures. Despite this transition towards equities, banks still hold a significant share of household financial savings—33.5% in FY24 compared to 34.9% in FY23”. Also, household savings and their subsequent financialization do not have much to do with deposit creation, which is entirely made by banks. What actually drives increased deposits is credit growth or increased lending. When interest rates are eased, people tend to borrow more and spend more, which circulates more money in the economy. For the past 4 years, RBI has been tightening the screws on interest rates, which raises the cost of borrowings, and makes it more expensive to take loans, putting a dampener on credit growth, but effectively curbing inflationary pressures. The last time RBI cut the repo rate by 40 basis points was back in May 2020, 4 years ago. The lag in deposit growth we’re witnessing is almost 3 years old. Coincidence much, or just good old economics at work? But with the <keyword id="19900043" type="General" weightage="20" keywordseo="fed" source="keywords">Fed</keyword> recently setting a rate cut precedent by slashing 50 bps off its interest rate, RBI is expected to follow suit in the next <keyword id="19918491" type="General" weightage="20" keywordseo="mpc" source="keywords">MPC</keyword> (Monetary Policy Committee) meeting, scheduled for November 2024. A rate cut would ease the aforementioned high cost of borrowing, and increase loan-taking for corporates and institutional investors, thereby stoking consumption in the economy. And then, deposit creation in banks is likely to return to its former glory. If not, then that would be a curious case to unravel! But that worry is for another day.

A Deposit Dilemma — What's the fuss about a crisis in Indian bank deposits? Are mutual fund investments to blame?

Around 75 % of <keyword id="20593458" type="General" weightage="20" keywordseo="UPI-users" source="keywords">UPI users</keyword> will stop using it if any transaction charge is levied on the service, a survey by LocalCircles said today. The survey found that 38% of users make over 50% of their payment transactions via <keyword id="19900911" type="General" weightage="100" keywordseo="UPI" source="keywords">UPI</keyword> instead of debit, credit, or any other form of digital transaction. "Only 22 % UPI users surveyed are willing to bear a <keyword id="20813527" type="General" weightage="20" keywordseo="transaction-fee" source="keywords">transaction fee</keyword> on payments, 75% of respondents stated that they will stop using UPI if a transaction fee is introduced," the survey said. The survey comprising three broad areas, claims to have received 42,000 responses from 308 districts but the number of replies on each question varied. The questions regarding transaction fee on UPI received 15,598 responses. The <keyword id="19907219" type="General" weightage="20" keywordseo="National-Payments-Corporation-of-India" source="keywords" meta.keywordsubtype="org" meta.entityname="National Payments Corporation of India" meta.hostid="261" meta.entityid="National Payments Corporation of India">National Payments Corporation of India</keyword> (NPCI) posted a record 57% rise in the volume of transactions and 44% rise in value in the 2023-24 fiscal year, compared to the previous fiscal year. For the first time UPI transactions crossed 100 billion and closed at 131 billion in a financial year, compared to 84 billion in 2022-23. In value terms, it touched Rs 199.89 trillion, compared to Rs 139.1 trillion, the report said. The survey found 37 % of respondents shared UPI transaction accounts for more than 50 % of their total payment in value terms. "With UPI rapidly becoming an integral part of nearly 4 in 10 consumers, there is strong resistance to any kind of direct or indirect transaction charges being imposed. LocalCircles will escalate the findings of this survey with the <keyword id="19908390" type="General" weightage="20" keywordseo="Ministry-of-Finance" source="keywords" meta.keywordsubtype="org" meta.entityname="Ministry of Finance" meta.hostid="261" meta.entityid="Ministry of Finance">Ministry of Finance</keyword> and <keyword id="19899810" type="General" weightage="20" keywordseo="Reserve-Bank-of-India" source="keywords" meta.keywordsubtype="org" meta.entityname="Reserve Bank of India" meta.hostid="261" meta.entityid="Reserve Bank of India">Reserve Bank of India</keyword> (RBI) so that the pulse of the UPI user is taken into account before any MDR charges are permitted," the survey report said. The survey was conducted online, between July 15 to September 20.

Majority of users say they will stop using UPI if transaction fee is levied, notes a LocalCircles survey

New Delhi [India], August 1 (ANI): The <keyword id="6354335" type="General" weightage="20" keywordseo="Reserve-Bank-of-India" source="Orion">Reserve Bank of India</keyword> (<keyword id="19899808" type="General" weightage="20" keywordseo="RBI" source="keywords">RBI</keyword>) has released a draft framework on alternative <keyword id="20470059" type="General" weightage="20" keywordseo="authentication" source="keywords">authentication</keyword> mechanisms to supplement the SMS-based OTP system for digital <keyword id="22624644" type="General" weightage="20" keywordseo="payment-transactions" source="keywords">payment transactions</keyword>. The RBI noted, "No specific factor was mandated for authentication, but the <keyword id="19989657" type="General" weightage="100" keywordseo="digital-payments" source="keywords">digital payments</keyword> ecosystem has primarily adopted SMS-based OTP as <keyword id="22624645" type="General" weightage="20" keywordseo="additional-factor-of-authentication" source="keywords">Additional Factor of Authentication</keyword> (AFA). While OTP is working satisfactorily, technological advancements have made available alternative authentication mechanisms." The draft discusses the Additional Factor of Authentication (AFA), which involves using more than one factor to authenticate a payment instruction. It requires that the process validate and confirm the credentials of the customer initiating the payment. Furthermore, the draft specifies that issuers must obtain explicit consent from customers before enabling any new authentication factor. Customers should also have the option to deregister from using the new authentication method. The draft states, "All digital payment transactions, other than card present transactions, shall ensure that one of the factors of authentication is dynamically created, i.e., the factor is generated after initiation of payment, is specific to the transaction and cannot be reused." Additionally, the draft mandates that issuers must have a system to alert customers in near real-time for all eligible digital payment transactions. It also prohibits transaction issuers from entering into exclusive arrangements with any Payment Service Provider or Technology Service Provider, which could limit their ability to implement alternative authentication solutions. RBI has proposed <keyword id="22624646" type="General" weightage="20" keywordseo="e-mandates" source="keywords">e-mandates</keyword> for <keyword id="21970493" type="General" weightage="20" keywordseo="recurring-transactions" source="keywords">recurring transactions</keyword> in mutual funds, insurance premiums, credit card bill payments for values up to Rs 1 lakh and in respect of all other categories for value up to Rs 15,000. The banking regulator also suggests that issuer shall be liable for the process and technology deployed for authenticating digital payments. There should also be a system of alerting the customer in near real time for all digital payment transactions. The draft notes that small value card present transactions up to Rs 5000 per transaction in contactless mode at Point of Sale (PoS) terminals are exempt from the AFA requirement. The central bank has invited comments and feedback on the draft framework until September 15, 2024. The proposed alternative authentication mechanisms aim to provide more choices for authentication factors to Payment System Operators and users.

RBI proposes alternative methods for authentication of digital payments, in addition to SMS-based OTP system

Nalin Bansal, Chief Relationship Management at the National <keyword id="20242630" type="General" weightage="20" keywordseo="payments" source="keywords">Payments</keyword> Corporation of India (<keyword id="19998946" type="General" weightage="20" keywordseo="NPCI" source="keywords">NPCI</keyword>), speaking at the Global Fintech Festival 2024 on Wednesday, emphasized that only 25 per cent of payment users are <keyword id="19900675" type="General" weightage="20" keywordseo="women" source="keywords">women</keyword>, with even lower penetration in semi-urban and rural areas. "While we've achieved significant scale in <keyword id="20377974" type="General" weightage="20" keywordseo="financial-inclusion" source="keywords">financial inclusion</keyword>, penetration remains a challenge, with only 25% of payment users being women, and even fewer in semi-urban and rural areas. Many women's mobile numbers are not linked to their bank accounts, hindering their participation," Bansal said. He added, "Yet, data shows women are 50% less prone to fraud and are highly loyal and engaged users. As an ecosystem, we must prioritize personalized, assisted services and continuous engagement across all channels. UPI123 has made strides, especially for initiatives like Ujjwala, and prepaid instruments hold promise as a 'secret purse' for women. Building trust is crucial, and it is our collective responsibility to foster it." Women are more likely to adopt <keyword id="20853683" type="General" weightage="100" keywordseo="digital-financial-services" source="keywords">digital financial services</keyword> when introduced by local agents or <keyword id="22950816" type="General" weightage="20" keywordseo="community-influencers" source="keywords">community influencers</keyword>, particularly women who can help them overcome social and technological barriers. Women who make at least five <keyword id="19971375" type="General" weightage="20" keywordseo="transactions" source="keywords">transactions</keyword> in the first week of onboarding are twice as likely to continue using <keyword id="19900911" type="General" weightage="20" keywordseo="UPI" source="keywords">UPI</keyword>. This highlights the need for financial service providers to rethink in-app nudges and sales metrics to encourage consistent usage. 93 per cent of women surveyed expressed the need for ongoing support during the first three months of using digital payments, particularly for grievance redressal during failed transactions. Kalpana Ajayan, Regional Head - South Asia, Women's World Banking, said, "We recognize that digital payments can serve as a powerful tool for women, enabling them to manage their finances more effectively, access a broader range of services, and ultimately secure a better future for themselves and their families." She added, "By addressing the specific barriers that women face in adopting digital payments, we open up a new frontier for growth. This initiative is about much more than inclusion--it's about positioning women as key drivers in the digital financial ecosystem." The NPCI's UPI platform has already revolutionized India's payment landscape, with UPI transactions soaring from Rs 920 million (USD 11.08 million) in FY 2017-18 to Rs 83750 million (USD 1.01 billion) in FY 2022-23, reflecting a staggering CAGR of 147 per cent. The value of UPI transactions reached INR 80.79 trillion (USD 96,287) across approximately 55.66 billion transactions in the first four months of FY 2024-25. Of the 536 million women aged 15 years and older in India, 37 per cent report using mobile internet, making the addressable market for UPI solutions among women around 200 million strong.

Women are more likely to adopt digital financial services when introduced by local agents or women community influencers

The <keyword id="20449324" type="General" weightage="20" keywordseo="Finance-Bill" source="keywords">Finance Bill</keyword> 2024 was passed by <keyword id="19895394" type="General" weightage="20" keywordseo="Lok-Sabha" source="keywords" meta.keywordsubtype="org" meta.entityname="Lok Sabha" meta.hostid="261" meta.entityid="Lok Sabha">Lok Sabha</keyword> on Wednesday evening, with a few amendments moved by the government. Replying to the debate, Finance Minister Nirmala Sitharman said the approach of the government has been to bring greater simplification of <keyword id="19987671" type="General" weightage="20" keywordseo="tax" source="keywords">tax</keyword> laws and procedures and enable growth and employment in the country. She responded to points made by members. The Finance Minister clarified that in real estate, the roll over provisions have not been withdrawn and are applicable. She said if the capital gain in a property transaction is invested in buying another one or two properties up to a maximum value of Rs 10 crore, no capital gain tax is required to be paid on such profits. <keyword id="20619608" type="General" weightage="20" keywordseo="capital-gains" source="keywords">Capital gains</keyword> can also still be invested in bonds which are notified under Section 54 of the Income Tax Act up to a maximum of Rs 50 lakh annually and save on taxes. To give relief on budget proposals, Sitharaman also moved an amendment in the Finance Bill on the changes in the capital gains tax on <keyword id="20412285" type="General" weightage="20" keywordseo="property-transactions" source="keywords">property transactions</keyword>. The amendment implies that taxpayers can avail either a lower tax of 12.5% without indexation or a rate of 20% with indexation, if the property is acquired prior to July 23, 2024, the day union budget was presented in the Lok Sabha. Sitharaman clarified that taxpayers can compute taxes under both provisions and choose to pay tax under the scheme where lower tax is applied. Effectively, July 23, 2024, is now set as the cut-off date for the calculation of the capital gains versus the earlier cut-off of 2001. Sitharaman said she has proposed these amendments as some members have raised hypothetical calculation to prove that under new provisions taxpayers will have to pay higher taxes. The new tax proposals on capital gains tax was brought in to bring in parity among different asset classes like equities, mutual funds and real estate. In the Finance Bill introduced on July 23, the Finance Minister had proposed a flat long term capital gains tax of 12.5% with no <keyword id="943856" type="General" weightage="100" keywordseo="indexation-benefit" source="Orion">indexation benefit</keyword>s, prior to it property transactions used to be taxed at 20% with indexation benefit. The minister also clarified that the grandfathering proposal will be allowed only for individual and Hindu Undivided Family (HUF) taxpayers and not for companies and Non Resident Individuals. They have to pay flat 12.5% LTCG tax without indexation. The proposed amendment will apply not only on real estate transactions, but also on unlisted equity transactions, which are done before July 23, 2024. All such transactions will be taxed at 10% long term capital gains instead of FY24-25 budget provision of 12.5% tax. With the opposition members demanding removal of <keyword id="19951327" type="General" weightage="20" keywordseo="GST" source="keywords">GST</keyword> on health insurance, Sitharaman said tax was there on medical insurance even before GST was introduced. "There was already a Service Tax on medical insurance, before the GST was introduced. This is not a new tax, it was already there in all the states. Those protesting here, did they discuss regarding the removal of this tax in their states? Did they write to the Finance Ministers of their respective states about it and asked them to raise it in the GST Council where states have 2/3rd part? No, but they are protesting here. This is their double standards, this is their drama," she said. "Wrongful protests have happened recently, and comments have been passed on the basis of a news report which suggested that the 'Centre has pocketed Rs. 24,529 crores of health insurance premiums alone'. This is incorrect and highly misleading. The GST rate of 18% on health insurance comprises of 9% CGST and 9% SGST. Thus, of the total collections of Rs 24,529 crores from health insurance in the last 3 years, Half of it, Rs. 12,264 crores, went straight to the states as SGST. It doesn't even come to the Centre," she added. The minister said that apart from this, roughly 41%of the Centre's share of GST collection on health insurance is devolved back to the states again, as part of Tax Devolution as per the Finance Commission's formula. Sitharaman said the new income tax regime is simpler and offers lower income tax rates for individuals. "It gives flexibility to the taxpayer to see where he wants to put his money in the absence of exemptions which is available in the old income tax regime. The old regime has not been dissolved and is still an alternative to the new tax regime. It still offers benefits of various deductions such as interest on home loan, etc. Individuals without business income can choose between regimes once and can revert back too. Hence, a choice has been provided to assesse," she said. For the previous Assessment Year 2023-24 till December 31, 2023, about 3.8% of taxpayers opted for the new tax regime, which equates to 30.93 lakh individuals, from a total of 7.98 crore ITRs filed in the categories of ITR-1 to ITR-4, she said. "However, for the Assessment Year 2024-25 until July 31, 2024, there was a dramatic increase in adoption of the new regime, with approximately 72.8% of taxpayers choosing the new tax regime. This represents about 5.25 crore individuals, out of a total of 7.22 crore ITRs filed in the same category." Sitharaman said this shows a substantial shift in taxpayer preference towards the new tax regime, over the span of just one year. "Taxpayers opting for the new regime does not mean savings and investments are not happening in the economy by the middle-class. Due to growth in fintech, better awareness, and ease of investment due to UPI, e-KYC, progressive regulations, investments in mutual funds have increased tremendously. On an average, 17.88 lakh new folios have been added every month in the last 5 years since June 2019. The number of unique mutual fund investors has grown from under 1 crore in 2014 to about 4 crore today," she added. The Finance (No.2) Bill, 2024 was passed after amendments moved by opposition were negatived. Sitharaman said the vision of Prime Minister Narendra Modi has been to establish a simple, efficient and fair technology-driven taxation regime in the country. "So, simplification and ease of compliance for the taxpayer has been the primary objective. In the last 10 years, and this year, in the third term of PM Modi, the approach to taxation has been to simplify it, reduce the burden on taxpayer and make sure it is transparent and equitable," she said. "This year also, our approach has been that we bring in greater simplification of tax laws and procedures, and that we enable growth and employment in this country," she added. Sitharaman presented the Union Budget in Parliament on July 23. This is the first full budget of the NDA government led by PM Modi. The BJP-led alliance won a third successive term earlier this year. The Lok Sabha took up discussion on the Finance Bill after the Appropriation Bill for the central government's expenditure for 2024-25 was passed by the House on Monday. The Finance Bill will now be discussed by Rajya Sabha. The passage of bill will complete the budget process.

Lok Sabha passes Finance Bill, provision on LTCG tax on property transactions amended

Payments made via Unified Payments Interface (UPI) reported a 45% yearly growth, according to data from the National Payment Corporation of <keyword id="19895063" type="General" weightage="20" keywordseo="India" source="keywords">India</keyword> (<keyword id="19998946" type="General" weightage="20" keywordseo="NPCI" source="keywords">NPCI</keyword>). The value of transactions also saw a growth of over 35%, totaling Rs 20.64 trillion. This marks the third consecutive month when total transactions exceeded Rs 20 trillion. In June 2024, the total UPI transaction value was Rs 20.07 trillion, while in May it was Rs 20.44 trillion. NPCI data also showed that the average daily transaction value through UPI in July 2024 was Rs 466 million, or about Rs 66,590 crore. Compared with June, the volume of <keyword id="19957378" type="General" weightage="100" keywordseo="UPI-transactions" source="keywords">UPI transactions</keyword> grew by 3.95% in July, while the value of transactions increased by 2.84%. In the first four months of the current fiscal year (2024-25), UPI recorded transactions amounting to Rs 80.79 trillion, across approximately 55.66 billion transactions. In 2023-24, total UPI transactions were 131 billion, compared to 84 billion in 2022-23. The monthly bulletin of the <keyword id="19899810" type="General" weightage="20" keywordseo="reserve-bank-of-india" source="keywords">Reserve Bank of India</keyword> (RBI) reported that over the last four years, UPI transactions have seen a ten-fold increase in volume, from 12.5 billion transactions in 2019-20 to 131 billion transactions in 2023-24, which accounts for 80% of the total digital payment volumes. Unified Payments Interface (UPI) transactions experienced substantial growth, increasing by 57% year-on-year in FY24. Within this segment, PhonePe and Google Pay dominated, holding a combined market share of 86%, according to the Boston Consulting Group's (BCG) Banking Sector Roundup for 2023-24. A shift in <keyword id="19989657" type="General" weightage="20" keywordseo="digital-payments" source="keywords">digital payments</keyword> was noted, with credit card transactions doubling over the past three years. In contrast, debit card transactions declined by 43% year-on-year. By making digital payment platform technology and device agnostic, UPI has contributed to <keyword id="20377974" type="General" weightage="20" keywordseo="financial-inclusion" source="keywords">financial inclusion</keyword> at the grassroots level. Digital payments in India are hitting fresh highs, as citizens increasingly adopt emerging modes of online transactions. One key emphasis of the Indian government has been to ensure that the benefits of UPI are not limited to India alone; other countries, too, can benefit from it. UPI is India's mobile-based fast payment system, which facilitates customers to make round-the-clock payments instantly using a Virtual Payment Address (VPA) created by the customer. The share of UPI in digital payments in India has reached close to 80% in 2023. Today, India accounts for nearly 46% of the world's digital transactions, based on 2022 data.

UPI transactions cross Rs 20 trillion for third successive month, in July 2024

The <keyword id="19899808" type="General" weightage="20" keywordseo="RBI" source="keywords">RBI</keyword> on Tuesday proposed rationalising <keyword id="19909672" type="General" weightage="20" keywordseo="regulations" source="keywords">regulations</keyword> that cover <keyword id="19986776" type="General" weightage="100" keywordseo="export" source="keywords">export</keyword> and <keyword id="20040382" type="General" weightage="20" keywordseo="import" source="keywords">import</keyword> <keyword id="19971375" type="General" weightage="20" keywordseo="transactions" source="keywords">transactions</keyword> with an aim to promote ease of doing <keyword id="19933715" type="General" weightage="20" keywordseo="business" source="keywords">business</keyword> and empower banks to provide more efficient service to their <keyword id="19986712" type="General" weightage="20" keywordseo="foreign-exchange" source="keywords">foreign exchange</keyword> customers. The central bank has issued 'Regulation of Foreign Trade under Foreign Exchange Management Act (<keyword id="19940710" type="General" weightage="20" keywordseo="fema" source="keywords">FEMA</keyword>), 1999 - <keyword id="20399690" type="General" weightage="20" keywordseo="draft" source="keywords">Draft</keyword> Regulations and Directions' in this regard. As per the draft, every exporter should furnish to the specified authority a declaration specifying the amount representing the full export value of the goods or services. "The amount representing the full export value of goods and services shall be realised and repatriated to India within nine months from the date of shipment for goods and date of invoice for services," it said. The draft also proposes that an exporter who has not realised the full value of export within the time specified may be caution listed by the authorised dealer. An exporter who has been caution listed can undertake export only against receipt of advance payment in full or against an irrecoverable letter of credit, to the satisfaction of the authorised dealer. According to the draft, no advance remittance for the import of gold and silver should be permitted unless specifically approved by the <keyword id="19899810" type="General" weightage="20" keywordseo="Reserve-Bank-of-India" source="keywords" meta.keywordsubtype="org" meta.entityname="Reserve Bank of India" meta.hostid="153" meta.entityid="Reserve Bank of India">Reserve Bank of India</keyword>. The RBI said the proposed regulations are intended to promote ease of doing business, especially for small exporters and importers. They are also intended to empower Authorised Dealer banks to provide quicker and more efficient service to their foreign exchange customers, the central bank said. The RBI has sought comments on the draft regulations under FEMA and directions to authorised dealer banks by September 1.

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