The existing cap of Rs.20 lakh on loans against security of funds held in NR(E) RA and FCNR(B) deposits, either to the depositors or third parties, has been enhanced to Rs. 100 lakh. The banks have been advised not to undertake artificial slicing of the loan amount to circumvent the aforesaid ceiling.

The free and fair poll in world’s largest democracy is over and the new Government is in the
process of taking shape. The current economic outlook provides a great challenge to the policy makers. The entire nation and more particularly professionals including Chartered Accountants have to play a major role in shaping India's growth story. The Government needs to address following areas:
Recovery from Economic Slow Down: sentiments are getting better and a major economic push is needed to move towards rapid growth. The Government may consider the following -

• To ensure that bank credit is available easily with lower interest rate. The interest rates require a 3 to 4 per cent reduction immediately.
• The insistence on collateral by banks and their lackluster attitude to fund real estate, infrastructure, power projects and grass root expansions need policy support in shape of credit enhancement.
• Immediately initiate massive PPP projects in the area of power projects, ports, roads, interlinking of rivers and watershed development.
• Agriculture sector needs special technological input for better produce and empowerment to be able to afford cold chain facility and warehousing of products. Movement of agro goods across nation to be tax free and without any approval / licenses. Tax burden on agriculture including Mandi Tax and other levies to be withdrawn immediately.
• To strengthen banks and financial institutional framework for longer channelization of funds at all levels - fiscal policy support for resource raising and deployment
• Tax burden on Indian economy is mounting. The Government may consider reducing its size significantly. Indirect taxes including VAT, Service Tax and other taxes need substantial reduction. Direct tax may need to go down by 5 to 10 per cent.
• Corporate debt restructuring need active support and approach of recovery by asset reconstruction companies need to give way to revival approach by supporting management and giving professional and financial input.
• Government debt restructuring should be a major agenda. International and domestic debt should be pre-paid with an embargo on fresh borrowing. This is the right opportunity as deficit funding does not pose a major inflationary threat.

Governance: Transparency in governance is a must and major social steps are needed for a war against corruption and inefficiency. The Government / PSU jobs need not have the current protection to enable a lean and effective set up to be put in place.

Human Resource Welfare: The working human resource need a fresh dose of justice. The hand worker deserves better salary levels. The current labour laws are to be completely revamped to eradicate unnecessary requirements which may be irrelevant now. Social security to everyone through contributions is to be introduced for unorganized sector also. Long hours working being practiced by multinational companies in India has to be eradicated by effective laws. This exploitation is adversely impacting social fabric. Special treatment is required for BPO and night shift working community.

In order to bring about uniformity in the manner of declaring dividend among listed companies, SEBI has made it mandatory for companies to declare their dividend on a per share basis only. This means that irrespective of the face value of the share, the company will have to mention the dividend on an absolute basis.

SEBI has said that no mutual fund product can invest more than 30% of its net assets in money market instruments of a single issuer. The ceiling, aimed at mitigating the risk of concentration, does not apply to Government bonds, treasury bills and collateralized borrowing and lending obligations.

In an important ruling, the Supreme Court (SC) has held that the Securities and Appellate Tribunal (SAT), a quasi judicial authority that presides over capital market related cases, has no powers to modify the penalty imposed on stock brokers by the Securities and Exchange Board of India (SEBI). While disposing of the case, SC made it clear that SEBI can suspend the license of a broker for minor violation of rules and cancel it altogether in case of major violations, and the tribunal cannot alter the market regulator's decision. There have been instances where aggrieved parties have moved to SAT against the SEBI decision and the tribunal has let them off after imposing monetary penalties. This is
despite the fact that the SEBI Act does not provide any such power to the tribunal.

The Delhi High Court has ruled that commercial renting of premises will not attract service tax. Renting of immovable property for use in the course or furtherance of business cannot be regarded as a service and therefore cannot be taxed.

In view of the extension of the relaxation given earlier, eligible borrowers, proposing to avail of External Commercial Borrowings (ECB) beyond the prescribed all-in-cost ceilings can now approach the Reserve Bank, under the approval route until December 31, 2009.

The Reserve Bank of India has stipulated the following in respect of transfer of shares/Preference
shares/Convertible Debentures by way of sale:

• In case of transfer of shares from a resident to a non-resident / non-resident Indian and vice versa, the transferee / his duly appointed agent is required to approach the investee company to record the transfer in their books along with the certificate in form FC-TRS from the designated AD branch that the remittances have been received by the transferor / payment has been made by the transferee. It may be noted that "preference shares" mean compulsorily and mandatory convertible preference shares and "debenture" means compulsorily and mandatory convertible debentures. The form FC-TRS has been revised .
• It has been decided that henceforth, the form FC- TRS should be submitted to the AD Category - I bank, within 60 days from the date of receipt of the amount of consideration. The onus of submission of the form FC-TRS within the given time frame would be on the transferor / transferee, resident in India.
• In case of transfer of equity instruments where the non-resident acquirer proposes deferment of payment of the amount of consideration, prior approval of the Reserve Bank would be required, as hitherto.

The Supreme Court held in the case, Raghuvir Singh vs. Hari Singh Malviya, that while calculating the compensation for the loss of income due to the death of a person in a motor vehicle accident, the dearness allowance and house rent allowance drawn by him should be taken into account. The motor accident claims tribunal took into account only the basic pay for computing the compensation under Section 166 of the Motor Vehicles Act. It was approved by the Madhya Pradesh high court. The Supreme Court set aside those rulings and stated that Dearness allowance should form part of income. House rent allowance is paid for the benefit of family members and not for the employee alone.

The government has clarified that exporters will not get service tax refund on services consumed for export of goods before October 6, 2007.