Government to Issue Sovereign Gold Bonds

Government of India, in consultation with Reserve Bank of India (RBI), has decided to issue Sovereign Gold Bonds. The Bonds will be issued on November 26, 2015. Applications for the bond will be accepted from November 05, 2015 to November 20, 2015. The Bonds will be sold through banks and designated post offices as may be notified. The borrowing through issuance of the Bond will form part of market borrowing programme of Government of India.


It may be recalled that the Finance Minister had announced in Union Budget 2015-16 about developing a financial asset, Sovereign Gold Bond, as an alternative to purchasing metal gold.

The major features of the Bond are given below:

• Product name- Sovereign Gold Bond
• Issuance- To be issued by Reserve Bank India on behalf of the Government of India.
• Eligibility- The Bonds will be restricted for sale to resident Indian entities including individuals, HUFs, trusts, Universities, charitable institutions.
• Denomination- The Bonds will be denominated in multiples of gram(s) of gold with a basic unit of 1 gram.
• Tenor- The tenor of the Bond will be for a period of 8 years with exit option from 5th year to be exercised on the interest payment dates.
• Minimum size- Minimum permissible investment will be 2 units (i.e. 2 grams of gold).
• Maximum limit- The maximum amount subscribed by an entity will not be more than 500 grams per person per fiscal year (April-March). A self-declaration to this effect will be obtained.
• Joint holder- In case of joint holding, the investment limit of 500 grams will be applied to the first applicant only.
• Frequency- The Bonds will be issued in tranches. Each tranche will be kept open for a period to be notified. The issuance date will also be specified in the notification.
• Issue price- Price of Bond will be fixed in Indian Rupees on the basis of the previous week’s (Monday–Friday) simple average of closing price of gold of 999 purity published by the India Bullion and Jewellers Association Ltd. (IBJA).
• Payment option- Payment for the Bonds will be through electronic funds transfer/cash payment/ cheque/ demand draft.
• Issuance form- Government of India Stock under GS Act, 2006. The investors will be issued a Stock/Holding Certificate. The Bonds are eligible for conversion into demat form.
• Redemption price- The redemption price will be in Indian Rupees based on previous week’s (Monday-Friday) simple average of closing price of gold of 999 purity published by IBJA.
• Sales channel- Bonds will be sold through banks and designated Post Offices, as may be notified, either directly or through agents.
• Interest rate- The investors will be compensated at a fixed rate of 2.75 per cent per annum payable semi-annually on the initial value of investment.
• Collateral- Bonds can be used as collateral for loans. The loan-to-value (LTV) ratio is to be set equal to ordinary gold loan mandated by the Reserve Bank from time to time.
• KYC Documentation- Know-your-customer (KYC) norms will be the same as that for purchase of physical gold. KYC documents such as Voter ID, Aadhaar card/PAN or TAN /Passport will be required.
• Tax treatment- The interest on Gold Bonds shall be taxable as per the provision of Income Tax Act, 1961 (43 of 1961) and the capital gains tax shall also remain same as in the case of physical gold.
• Tradability- Bonds will be tradable on exchanges/NDS-OM from a date to be notified by RBI.
• SLR eligibility- The Bonds will be eligible for Statutory Liquidity Ratio.
• Commission- Commission for distribution shall be paid at the rate of 1% of the subscription amount.

IIT Delhi uses lottery system to select students who will meet Mark Zuckerberg

When Facebook founder and CEO Mark Zuckerberg interacts with students and faculty at the Indian Institute of Technology in Delhi in a town hall on Wednesday, most students will be sitting out. Almost everyone of the over 8,000­ strong student community at the IIT wants to meet and, if possible, ask a question to Zuckerberg, a role model for many of them. But the venue where the tech entrepreneur is holding the town hall is too small to accommodate all of them. Only one in nine students will get an entry to the hall and they have been selected through a lottery. The hall has a seating capacity for 1,100, but only 900 of the seats are reserved for students. The entire session is being handled by a Facebook team.

It started the process last Thursday and the response so far has been huge. When an invite was posted on the IIT website, 1,300 students filled up the application form in the first two hours. Facebook discontinued the link after it got 3,500 applications. "Town hall has always been popular, but not like this one," said a faculty at IIT Delhi. "Mark is a role model for most of the students as he is easy to identify with. Also as the focus of both the institute and students is moving towards entrepreneurship and innovation, his visit has created a lot of enthusiasm." Zuckerberg is expected to speak for 15 minutes and spend the next hour answering questions from the audience.

Arshad Nasser, one of the lucky students selected to participate in the town hall, said there would be no direct questioning, though most town hall meetings allow that. "I wonder whether my question would be read out on Wednesday." Nasser, who is in his final year of Master's in Design, said he was not sure whether it was the question he had put in the application form for Zuckerberg or the lottery that got him through. His question was: "Will FB extend itself as a physical product so that it can interact with devices at home and also connect with social circle?"

Jyoti Meena, a final year B.­Tech student, said many of her friends who could not make it to the list were upset. Still, she said the Facebook chief 's visit itself has created excitement on the campus. "Before any town hall, there are posters, banners, etc. but this time there was nothing but still the entire campus is abuzz with FB," she said. Her question for Zuckerberg is: "What was your Eureka moment that helped you decide that to pursue with FB?" Dhiritraj Das, a third ­year dual degree (Bio-Chemical engineering and Bio-­technology) student, is one of the majority who could not make it to the list of students who received invites for the town hall. Das is already an entrepreneur and is busy bringing an e-commerce venture, called All Day Sports, to life. "I wanted to ask Zuckerberg a question on the Internet.org. As I would want to know what technology support will FB provide for this so that rural and backward areas in the country get access to the Internet?"

A Facebook spokesman said the upcoming event is a rare occasion for the company to have the media invited in any country. "It is mainly because India is one of the countries with largest users outside of the US for the company," he said. Zuckerberg in his earlier speeches at the company headquarters had shared his views on India. "India is personally very important to the history of our company here. This is a story that I have not told publicly and very few people know," he had said. During his visit, Zuckerberg is likely to be mostly in Delhi, said a source.

-- CA Kasliwal Ambar

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• ET

What the Wolf Of Wall Street has to say on Indian Economy

Views of Jordan Belfort

Market is current on bumpy ride where we are seeing one day market is going up and second day market corrects. This is a very negative sign as market is highly volatile and is making new low at each trading session. Last week we had made a low of 7850 and this week we made a low of 7650. Now the whole street is taking of 7500 and 7200. But our conviction is clear that market has bottomed out and we don’t see any further pain on street. A 50-60 pts correction is possible but chances of markets getting back to 8000 levels are high. Currently global concern is resulting in shrinking on market and in compare of Global scenario Indian fundamentals are far better so every fall is a buy and this is the right time to buy. Valuations are quite cheap and long term bet is surely on India. Banking stock has been heavily hit in last 15 trading session. Bank nifty has corrected from 19000 to 16500. PSU Bank like SBI, OBC, BOI, Corporation Bank are all trading at 52 and 72 week lows. Most of the banking stocks are available at 2013 lows so we advise to buy these stocks as rebound in PSU banks is definitely around the corner. Most of the PSU bank are available at P/BV of 0.32 and lower which is surely a buying opportunity. We are once again advising you that currently the whole street is in a mood to sell and this is the best opportunity to buy as the same people will come back to buy at 8000 and 8100 levels. So don’t miss the chance. We, at CNI, are bulls on street. Currently market has been surrounded by full negativity.

No one is ready to buy. We are talking with many retailers, brokers, investors and all are afraid to invest as all have one opinion in common that nifty will touch 7000 levels. Media, Analyst, Foreign brokers all are talking negative and are bearish on stocks. Poor monsoon, failed parliament session, Bihar election and earning of companies is in the mind of the people. We believe Indian economy is in a far better state than 2013. We have strong foreign reserves to protect downside risk of our currency. Crude price is another boon for the economy. Coming to reformative action Govt. action will fail till 2016 as Rajya-Sabha fails majority and will gain majority only in 2016. So we should give the new Govt some time and wait for results. Bihar election is a strong trigger and we estimate NDA Govt. will gain majority.

-- CA Kasliwal Ambar

Update: No more Service Tax on Yoga Training

CBEC vide its Notification No. 20/2015-Service Tax dated 21-10-2015 amended Notification No. 25/2012-Service Tax, dated the 20th June, 2012 to provide following new exemptions from levy of service tax:

No More Service Tax on Yoga Training:

Now 'Yoga' gets place in Mega Exemption Notification w.e.f. 23-10-2015. Earlier the exemption was extended to only Services by an entity registered under section 12AA of the Income tax Act, 1961.

-- CA Kasliwal Ambar

Amazon Growth Story continues - Business quadrupled in 2015

Amazon Inc's India business has quadrupled in 2015 over the previous year as customers and sellers have risen more than threefold, helped by a similar surge in "fulfillment capacity" as online shopping gathers momentum across the country. "Active customer accounts are up 230 per cent year ­over ­year. We are in the middle of the Diwali season that is going really well," Brian Olsavsky, chief financial officer at Seattle based Amazon, said on an investor call on Thursday, the first time that these numbers have been made public. "The number of sellers has grown more than 250 per cent year ­over year. Sales are 4x what they were last year." The Indian unit of the world's largest consumer marketplace has been adding products at a rate of 40,000 per day this year with 90 per cent of sellers using its logistics and warehousing services. "As a result, we've tripled our fulfillment capacity       year ­over­ year. So we are very encouraged, and continue to invest there very heavily," Olsavsky said.

A month ago, the company injected Rs 1,237 crore into Amazon Seller Services Pvt, the biggest infusion of capital into its Indian flagship since entering the country in 2013. India is one of the fastest­ growing markets for the US online retail giant and Amazon's founder Jeff Bezos had pledged to invest $2 billion in local operations last year. Given the faster­ than ­expected expansion, that number may increase, an Amazon official has indicated. Amazon expects India to overtake Japan, Germany and the UK to become its largest overseas market besides becoming the quickest to reach $10 billion in gross merchandise value (GMV) in the company's history, Diego Piacentini, Senior Vice­ President for international business, told ET last week. Since India bars foreign capital in business­ to ­consumer (B2C) e-commerce, Amazon operates a marketplace for vendors to sell products to customers, as do Flipkart and Snapdeal.

The company will be looking to keep pace as investors have been pumping money into homegrown rivals such as Flipkart and Snapdeal, seeking a slice of India's burgeoning e-commerce market. This is set to rise to $60­70 billion by 2019 from $17 billion in 2014, according to a February report by The Boston Consulting Group and Retailers Association of India. Experts feel Indian Internet companies may need to chart a longer and more tortuous path to profitability though. According to a recent JP Morgan report, India will likely see consolidation among the raft of players populating particular categories as considerations of scale, better pricing power and returns intensify. This consolidation may either be natural or forced, the latter more likely facilitated by investors, it said.

"The funding spigot can spur innovation only up to a point — 'excess' capital can end up funding more expensive customer acquisition strategies, greater discounting and leading to a more elevated cost structure," Viju George wrote in the JP Morgan report. India's aggressive e-commerce companies have been trying to outdo each other in big ­ticket fundraising. In July, Flipkart raised $700 million from a clutch of foreign investors, pegging the Bengaluru ­based company's valuation at $15 billion and making it one of the hottest global start-ups in recent years.

-- CA Kasliwal Ambar

Reference -

• ET

China makes another aggressive monetary policy move

China's Central Bank cut interest rates for the sixth time since November on Friday, and it again lowered the amount of cash that banks must hold as reserves in another attempt to jump-start a slowing economy.

China's monetary policy easing is at its most aggressive since the 2008/09 global financial crisis, underscoring concerns within Beijing about the health of the world's second­ largest economy.

The People's Bank of China (PBOC) said on its website that it was lowering the one ­year benchmark bank lending rate by 25 basis points to 4.35 per cent, effective from Oct. 24. "The People's Bank has delivered another jolt of stimulus," analysts at Capital Economics said in a note to clients, but added that they were "still waiting for clear evidence of an economic turnaround". 

"We are retaining our forecast that benchmark rates and the reserve requirement ratio will both be cut once more before the end of the year, with a further move in both early in 2016." Sobering economic data in the third quarter has demonstrated the daunting challenges faced by the country's leaders, not least in attaining the 7 per cent growth target set by the government. Data released on Monday showed China's economy grew 6.9 per cent between July and September from a year earlier, dipping below 7 per cent for the first time since the global financial crisis. 

The one ­year benchmark deposit rate was lowered by 25 basis points to 1.50 per cent. The RRR will also be cut by 50 basis points for all banks, taking the ratio to 17.5 per cent for the country's biggest lenders, the PBOC said in a statement. Buoyed by China's easing, which came late in the evening in Asia, European shares turned higher and the Chinese offshore yuan fell against the US dollar. The pan-­European FTS Eurofirst 300 extended gains to trade 2.2 per cent higher at 1,493.60, with miners jumping 2.9 percent in the minutes after the move. China's offshore yuan hit a four­ week low of 6.3958 to the dollar after the decision.

-- CA Kasliwal Ambar

Reference - 

• ET

If only a chip can bring such a big change in the Rural area!

A tiny chip designed in Bengaluru, the size of a postage stamp, might hold the answer to connecting India's rural population to the Internet, an ambitious goal being chased by the likes of Google, Facebook and Microsoft.

The chip, called Pruthvi, powers a system which can use television White Space — or wasted spectrum bandwidth — to beam Internet to scores of households. This innovation by Saankhya Labs, is important in today's India, where on one hand the government is pushing its ambitious 'Digital India' programme and on the other, large technology companies are working on similar goals.
"World over regulatory authorities are using or planning to use this spectrum for their respective connectivity programmes. India can take the lead in both technology and the markets for TV White Space-based broadband delivery.

And how long can the government not push the envelope... It's got to be expedited sooner than later," said Parag Naik, CEO and Co-founder of Saankhya Labs.

Founded in 2007 by Naik, Hemant Mallapur and Vishwakumara Kayargadde, the company has developed a system called Meghdoot, powered by its Pruthvi chip, which can utilise the existing TV White Space bandwidth available in India to provide wireless broadband to remote areas. TV White Space refers to the unused spectrum between active TV channels that are traditionally used for over-the-air transmission using TV towers and rooftop antennas. In India, this mainly refers to the spectrum used by the likes of Prasar Bharti.

The Meghdoot product family consists of a base station and user-side modem that can together provide Wireless Rural Broadband using the TV White Space spectrum from 400 to 800MHz.

The technology does not require line-of-sight, thus ensuring longer range, and can serve up to a radius of 10-15 km depending on antenna tower height and transmit power. The range can also be further increased with more powerful and taller antennas.


The company is soon set to conduct field trials across the country in collaboration with IIT-Bombay, IIT-Delhi and IIT-Hyderabad. They are also in discussions with Microsoft to do trials at Srikakulam in Andhra Pradesh.

The Meghdoot product line is compliant to the Wi-FAR standard, making the device compatible for use in other countries too. The company is also engaged with partners for trials in the Philippines, the US and Singapore.

-- CA Kasliwal Ambar

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• ET