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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Changes via Company Auditor’s Report Order , 2020 CARO

CARO Reporting, 2020 being notified

MCA has notified particular issues being important & thereby should be reported as per particular norms with the financial statements for certain entities as a part of their audit reports for almost all companies except a few below.

Banking, Insurance, Charitable setups & small cos. or OPC has been kept out of this exercise. Also, some smaller setups with below norms are exempt from this as below –

  • Not a holding or subsidiary of a Public company
  • Paid-up Capital plus Reserves l< 1 Crore at the reporting date.
  • Borrowings less than or equal to Rs. 1 Crore at any time during the year
  • Revenue less than or equal to Rs. 10 Crores in the financial year

Key points of change suggest towards-

company laws
  • Whether the company is maintaining proper records showing full particulars of intangible assets
  • Reporting on revaluation of Property, Plant and Equipment’s by company
  • Reporting of proceedings under the *Benami Transactions* (Prohibition) Act, 1988. i.e. whether the company has appropriately disclosed the details in its financial statements
  • Reporting if the *stock statements filed with banks* are in line with books of accounts, if the company was sanctioned working capital limits in excess of five crore rupees or more from banks or financial institutions. To report any discrepancies of 10% or more in the aggregate for each class of inventory
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  • Report quarterly returns or statements filed by the company with such banks or financial institutions are in agreement with the books of account of the Company, if not, give details
  • Reporting of *investments* in or providing of any *guarantee or security* or granting any loans or advances.
  • Loans overdue for more than 90 days, *evergreening of loans, reporting on any *loan default*, etc.
  • Report on evergreening of loans – specify the aggregate amount of such dues renewed or extended or settled by fresh loans and the percentage of the aggregate to the total loans or advances in the nature of loans granted during the year
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  • Reporting of compliances with RBI directives* and the provisions the Companies Act with respect to deemed deposits.
  • Reporting with respect to transactions not recorded in the books of account but now surrendered or disclosed as income in the income tax proceedings.
  • Report on  balances outstanding at the balance sheet date with respect to such loans or advances and guarantees or security to subsidiaries, joint ventures, and associates
  • Reporting on treatment by the auditor of *whistle-blower complaints* received during the year by the company
  • Reporting on the internal audit system
  • Reporting on cash losses
  • Reporting on the resignation of the statutory auditors
  • Reporting on the uncertainty of company capable of meeting its liabilities
  • Reporting transfer of *unspent CSR* amount to Fund specified in Schedule VII
  • Investment, Guarantee & Security given has been covered now along with loans & Advances – in terms of benefits to the company
  • Clarification required for Non-Disclosure of Properties taken on Lease by the Lessee
  • Auditor has to specifically comment on coverage and procedure adopted as per audit approach Also Materiality has been  defined as 10% or more in each class of Inventory

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Will the New Optional Tax Regime, affect Tax Savings in Larger India??

Budget 2020 – Optional Tax Regime and Side Effects.

Its argued that with an option to choose Tax model as per Budget 2020, Individuals may have lower incentives to save which can impact long term savings in India. It augurs well for the Govt, considering we are in relative slowdown times and look to boost consumption.

As against the Wishlist of a few for a New TAX Savings bond, the new option does not incentivize the bonds and all the more, assesses’ are induced towards reduced taxes for no deduction overall.

Much discussed but perhaps not so acknowledged issue of low demand metrics seems to be addressed by the new tax method as it enables citizens to choose rather than forced save for taxes.

Changing Habits:-
Saving habits are already changing with lifestyle changes and digital ways of living.
As per a recent study, there is a marked reduction in Indian savings from erstwhile 36% in 2012 to just about 30% currently.
However, the big question among all is that, whether the tax incidence on lower and lower middle class reduces overall in absolute terms? During these times of slowdown where Govt is constantly looking for more revenue sources, perhaps the idea is to move towards deductions free regime with simplified tax model which can engulf more Indians in the tax net with a specific eye on the largely let off businesses so far & the unorganized sector.

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