Despite economic slowdown due to GST, the Indian securitization market performed fairly well

Guidance Note to NBFCs for nomination of counsel in Delhi High Court

By Richa Saraf, (legal@vinodkothari.com)

BACKGROUND:

  1. In exercise of its powers under sub clause (iv) of clause (m) of sub section (1) of section 2 read with section 31A of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 ( “SARFAESI Act”), the Central Government issued a notification[1] dated August 5, 2016 notifying 196 Non- Banking Financial Companies (“Notified NBFCs”) as “Financial Institutions”, registered with the Reserve Bank of India (RBI) and having asset of Rs. 500 crore and above as per their last audited balance sheet, on which the SARFAESI Act is applicable. Read more

Impact of GST on factoring transactions

By Abhirup Ghosh, (gst@vinodkothari.com)

Factoring is a very popular product mode of working capital funding across the globe. In India, however, the picture is not quite rosy for factoring companies. Nevertheless, like every other thing in the country, factoring transactions will also be affected by the introduction of GST in India. Here in this article, we intend to walk you through the probable impact, GST would create on factoring transactions. Read more

No pass through status to trusts if the beneficiaries are not identified on the date of institution of trust.

By Nidhi Bothra & Vijaylakshmi Agarwal, (finserv@vinodkothari.com)

Executive summary

This tax update summarises a recent ruling of Chennai Income Tax Appeallate Tribunal (“Chennai ITAT”) in the case of TVS Investments iFund Vs ITO[1] wherein the issue before Chennai ITAT was whether interest income of beneficiaries rolled over to another venture capital fund would be taxed in the hands of the iFund or in the hands of the new fund (TVS Shriram Growth Fund). While contemplating on the issue, the matter pertaining to determinacy of the trust/ fund and tests relating to the same to achieve pass-through status under the Income Tax Act was also briefly discussed. Read more

GST on securitisation transactions.

By Nidhi Bothra, (gst@vinodkothari.com)

Transitioning into GST, assessing its impact on business and taking appropriate measures to bring about tax neutrality/ efficiency are the prime concern for all and sundry. GST therefore also has an impact on the securitisation transactions in India which now happens to be Rs. 85,000 crores[1] odd industry. In this article we are broadly trying to deal with GST impact on securitisation of standard as well as non-performing assets and its various facets. Read more

Is the two-section ordinance key to India’s bulging NPA crisis?

By Vinod Kothari, (vinod@vinodkothari.com)
The much-awaited ordinance, expected to make a tangible impact on India’s crisis of piling non-performing assets (NPA), was signed into law by the President on 5 May 2017. The Ordinance, consisting of barely two sections, makes amendments to the regulatory framework of banking in India, the Banking Regulation Act. After reading the law, one is forced to ask if this is what was holding up the resolution of NPA crisis in the country. Did it actually have to take all this time?

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Accounting treatment of securitization transactions undertaken by financial entities in India

By Vijaylakshmi Agarwal & Kanishka Jain, (finserv@vinodkothari.com

1.     Introduction

Presently, the accounting treatment for securitization transaction is unclear and ambiguous despite a clear convergence with IFRS. The accounting principle for securitization was contained in AS 30 (based on IAS 39). The ICAI had originally promulgated AS 30 (based on IAS 39) in the year 2009, but was kept in abeyance, and subsequently repealed[1], while IND AS 109 is applicable from the year 2018. Therefore currently, there is no standard as such dealing with securitization for such companies on which IFRS is not applicable. Therefore for the interim period i.e. from 2015 to 2018, there are no standards governing the accounting for securitization in existence. Read more

A decade after the Global Financial Crisis – Indian Securitisation market poised for a leap forward, by Vinod Kothari & Abhirup Ghosh

With the taxation issues resolved in the Budget 2016, and foreign portfolio investors allowed to invest in asset backed securities, Indian securitisation market is poised for a big leap forward. The indicative data available for the financial year 2016-17 mark a sharp 60% increase in the volume of pass-through securities (PTCs), signaling the much sharper growth to come.

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FAQs on Section 14 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002