Business and Finance News Highlights of the week transcript on 30 April 2023

Let’s begin – The Securities and Exchange Board of India has recommended that the certificate of registration of eight alternative investment funds be cancelled for non-compliance of AIF regulations and failure to file periodic reports. The eight funds — Quant First Alternate Investment Trust, IREO Advantage Fund I, Paranjape Plustus Fund 1, Saveda Venture Capital Fund, SRS Alternative Investment Fund, GSF Venture Capital Fund, Investmaxima Trust and Golden Bird AIF – failed to adhere to Section 28 of AIF regulations, which require funds to file periodic reports with regard to activities as called upon by the Sebi Board. This came to light while preparing investment data for the quarter ended December 2020 and the subsequent three quarters. AIFs must submit periodic reports about their activities and operations, including details of funds raised and invested under various schemes as well as categories of investors under the schemes.

Meanwhile – Aircraft delivery schedules of Air India and Akasa Air are likely to face turbulence, upsetting their market expansion plans as US manufacturer Boeing this week said said that deliveries may be delayed following production-related issues with its best-seller passenger jet 737 Max. One of the suppliers of the US-based company used a ‘non-standard manufacturing process’ used during the installation of two fittings in the fuselage section of certain variants of the 737 Max aircraft. While those 737s that are currently in operation with airlines can continue to operate, said Boeing, those which are on order will likely face a delay, it added. Air India and Akasa have placed orders for the 737 Max, which are progressively expected to get delivered this year and the next few years. Akasa Air, one of India’s youngest airlines, has placed its bet exclusively on the 737 Max as its entire current and future confirmed fleet comprises this aircraft type.

Moving on – The government is examining whether to reserve auditing of large companies and public interest entities to audit firms of certain size, repute and technological prowess. Discussions in this regard, though at an early stage, are revolving around a graded approach to addressing the issue of inadequate audit standards putting investor interests at risk, official sources said. Among the options being weighed are prescribing eligibility standards for audit firms, which oversee financial accounts of large listed companies, through means like a threshold size. In recent months, several instances have cropped up where companies with large public floats get their accounts audited by tiny, unknown audit firms, causing apprehensions among investors about the quality of their reports. The most prominent instance is the Hindenberg Research report revelation that independent auditor for Adani Enterprises and Adani Total Gas, “hardly seems capable of complex audit work”.

Now a news related to the apex court – The Supreme Court has held that the income tax department cannot reopen completed assessments under the Section 153A of the I-T Act, unless “incriminating material” is unearthed during search and seizure operations. Any other material emanating from the search can’t be relied on for issuing re-assessment orders. The ruling, tax experts said, could give much relief to taxpayers, as it reduces the scope for arbitrary re-assessments by the taxman. A battery of current litigation is due to reassessment orders not supported by incriminating material under Section 153A, which was withdrawn in 2021, but remains applicable to past cases.

In a separate development – The Reserve Bank of India has lifted a major roadblock for investments in the International Financial Services Centre at GIFT City, Gujarat, through the Liberalised Remittance Scheme route. Indian residents can now make remittances to IFSCs under the LRS framework. They are allowed to open a foreign currency account (FCA) in IFSC. Until now, any funds lying idle in FCA for up to 15 days had to be repatriated to the domestic rupee account. A new RBI circular has now allowed unutilised funds to be repatriated and surrendered to an authorised dealer bank within 180 days.

Lastly – Total enrolments under Atal Pension Yojana (APY), a government-backed scheme guaranteeing a minimum monthly pension of Rs 1,000-5,000 to the subscribers based on their contributions, crossed the 52 million mark on March 31. The scheme enrolled more than 11.9 million new subscribers in FY23 as compared to 9.9 million in FY22, clocking more than 20% growth, the finance ministry said in a statement. As of date, the total assets under management (AUM) in APY is more than Rs 27,200 crore and the scheme has generated an investment return of 8.69% since inception on May 9, 2015.