Three banks announces their merger ratios

  • On 4 March, the Union Cabinet allowed the merger of 10 public sector banks (PSBs) into four entities.
  • OBC and United Bank of India shareholders will receive 1,150 shares and 121 shares of PNB, respectively, for each 1,000 shares of their parent bank, according to regulatory filings.

On thursday board of Punjab National Bank (PNB) and Union Bank of India has approved for merger ratios with 4 other banks as per government exercise to Merge 10 Banks into 4 Banks.

According to a regulatory filing Thursday, Syndicate Bank shareholders will receive 158 Canara Bank shares for every 1,000 shares of their bank.

Banks that are going to Merge are:-

  •  Oriental Bank of Commerce (OBC) and the United Bank of India are to merge with PNB
  •  Andhra Bank and Corporation Bank are to merge with Union Bank of India.

OBC and United Bank of India shareholders will receive 1,150 shares and 121 shares of PNB, respectively, for every 1,000 shares in their parent bank, according to regulatory filings. Meanwhile, the shareholders of Andhra Bank and Corporation Bank will receive 325 and 330 shares, respectively, of Union Bank of India for every 1,000 shares of their bank.

The other banks that are expected to merge are Indian Bank and Allahabad Bank, and Canara Bank and Syndicate Bank. However, these banks have not yet reported the ratios for the merger.

On 4 March, the Union cabinet approved the consolidation of 10 public sector banks (PSBs) into four entities, a development that aims to have fewer but stronger lenders across India.

“These steps are taken so that consumers can benefit from the expansion of larger banks and more credit funds available”

Previous Share closes of these Banks are:-
  1. Union Bank of India’s shares closed at approximately 39.35 (up 8.25% from the previous close)
  2. Andhra Bank closed at approximately 113.52 (3.76% higher)
  3. Corporation Bank closed at approximately 19.05 (2.14% higher).
  4. Punjab National Bank’s shares on BSE were closed at some 44.9 (1% higher than previous close)
  5. Oriental Bank of Commerce closed at some 47.05 (up 15.89%)
  6. United Bank of India closed at some 7.5 (3.03% higher).

In the merger of Bank of Baroda (BoB) with Dena Bank and Vijaya Bank, Vijaya Bank and Dena Bank shareholders received 402 and 110 BoB shareholdings for every 1,000 shares they owned.

In April 2017, State Bank of India (SBI) merged five of its subsidiaries —
  • State Bank of Bikaner and Jaipur (SBBJ),
  • State Bank of Mysore (SBM),
  • State Bank of Travancore (SBT),
  • State Bank of Hyderabad (SBH)
  • State Bank of Patiala (SBP)
  • Bharatiya Mahila Bank (BMB)—

The step, which made SBI one of the top 50 big banks worldwide in terms of assets and saw 4,000 SBI employees and associate banks opting for voluntary retirement.

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Major Changes in CARO 2020 Comapred to CARO 2016

As you would Know, MCA has notified Companies (Auditor’s Report) Order 2020 or CARO 2020, with effect from February 25th, 2020. Notice that it was 16 Clauses earlier and there are 21 Clauses now. It added 5 Additional Clauses.

Below are 10 major changes in CARO 2020

1) Fixed Asset Rejig

a. Before words Fixed Assets, Now it is replaced with land, plant, equipment and intangible assets (PPEIA).

b.When Title Deed is not in the company’s name (except in the case of Lease) then all these instances disclose with justification in the tabular format.

c.Any Revaluation to be recorded in PPEIA.

d.Any Benami proceedings started to be reported.

2) Inventory Physical Verification & Bank Limit Rejig

a. Coverage of inventory verification and the procedure to be disclosed.

b. Any dis.crepancy to be closed above 10 percent

c. Any Working Capital Limit beyond 5 Cr on Current Assets Collateral to be reported and returns filed with Bank in compliance with Records

3) Loans & Advances Rejig

a. Earlier payments settled by extension, renewal or new loans to be reported.

b. Any loans on a request basis to be reported separately.

4) Default in Loan Repayment Rejigs 

a. Specified Default Reporting table

b. Disclosure of Financial Institutions found willful defaulter.

c. Terms of loan used for the right purpose or not

d. Whether Short term loans are applied for long term purposes.

e. Funds received under the service obligation of Subsy, JV or Associate Companies

f. Funds received for the commitment of shares of Subsy, JV or Associate Companies

5) Fraud Reporting Rejig

a. ADT-4 Filed by the Auditor, if any, to be reported.

b. Any complaint made to the whistleblower during the audit

6) Managerial Remuneration Clause Deletion

a. Payment of management remuneration in accordance with Sch V has been withdrawn

7) Five New Clauses

a. 17 – Cash Losses – Cash losses need to be reported to the FY if any

b. 18 – Resignation of Auditor – Issues raised by him whether they were considered or not if any.

c. 19 –The willingness of the Company to meet its current liabilities in the auditor’s view on the basis of ratios results and aging.

d. 20 – CSR Compliance – Ongoing project whether the unused amount was transferred to the fund within 6 months / Special account

e. 21 – Companies in Consolidation –All negative comments of CARO, whether of any grant, JV or Associate company as consolidated, must be reported in Holding Company Clause 21 of CARO.

8) NBFC Companies Compliance Reporting Rejig

a.  Whether NBFC is having a valid Certificate from RBI

b. Whether it’s CIC, whether there is more than 1 CIC and compliance in the community.

9) Internal Audit Rejig

a. Whether the Internal Audit System exists as per the Company Size or not?

b.Whether any internal audit report was considered by the auditors

10) Income Tax Transactions not in Books

a. Whether any transactions offered for income tax purposes, but not recorded in Books.

Conclusion:-

Welcome Changes, these will improve the reporting especially after ILFS, DHFL Fiasco

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CBDT sets March 31 deadline to complete Panama, Paradise Papers probe

CBDT is trying to complete this investigation early so that other investigative agencies can speed up their investigation. The Central Board of Direct Taxes (CBDT) is currently investigating on these cases in the Foreign Exchange Management Act, as soon as the tax department begins filing criminal cases CBDT will have the basis to convert these cases into the Money Laundering Act.

CBDT after completing the investigation may file prosecution charges against these entities,  to help other agencies to take action against those entities.

About 426 Indian companies with offshore accounts were under income tax department scrutiny in 2016. Over Rs, 1,000 crores of hidden income had been discovered by the department in Panama Papers alone, listing many famous personalities including KP Singh from DLF, Amitabh Bachhan, Aishwarya Rai, Sameer Gehlaut.

  • Around  714 companies and individuals had been identified in the case of Paradise Papers that came to light in 2017
  • Former state minister of Jharkhand Jayant Sinha is also named in this case who is a  member of the Hazaribagh parliament in Jharkhand state.

Appleby, A Bermuda-based legal services provider and Asiaciti based in Singapore, disclosed much of the data on   Paradise Papers which facilitated the establishment of low or zero tax rates on offshore firms.

Currently, CBDT is investigating these cases within the context of the Foreign Exchange Management Act. Once the tax department begins filing prosecution cases we have the basis to transform our case under the Money Laundering Prevention Act.

These cases are currently being investigated by the income tax department under the 2015 Black Money Act. Under this Act, if any person who is unable to justify the source of the funds in question will be required to pay a penalty of nearly 300 percent of the applicable tax liability on it.

These cases are not subject to domestic inquiry; the department is entirely dependent on foreign agencies for information. For the investigator as well as for the agency, therefore, setting a deadline for completing the investigation is not desirable.

Panama and the Paradise Papers mentioned only company names. Finding data from foreign agencies requires proper information that is not available to the department, thus slowing the investigation. Sometimes the department’s own machinery strikes down the request because the department has set unfulfilled SOPs.

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