August 02-08, 2020 Page 1

Volume No. 795

AUGUST 02-08, 2020 Total No. of Pages (including Cover):12

W E E K L Y

H i g h l i g h t s

FINANCE MINISTER SMT. NIRMALA SITHARAMAN

ATTENDS THE 5TH ANNUAL MEETING OF BOARD OF GOVERNORS OF ASIAN INFRASTRUCTURE INVESTMENT BANK

INDEX OF EIGHT CORE INDUSTRIES (BASE: 2011-

12=100) FOR JUNE, 2020

OPENING OF CURRENT ACCOUNTS BY BANKS -

NEED FOR DISCIPLINE

THE ASSOCIATED CHAMBERS OF COMMERCE AND INDUSTRY OF INDIA

August 02-08, 2020 Page 2

AUGUST 02-08 2020

CONTENTS

COMMERCE AND INDUSTRY

INDEX OF EIGHT CORE INDUSTRIES (BASE: 2011-12=100) FOR JUNE, 2020

3-4

FINANCE

TARIFF NOTIFICATION NO. 65/2020-CUSTOMS (N.T.) IN RESPECT OF FIXATION OF TARIFF VALUE OF EDIBLE OILS, BRASS SCRAP, POPPY SEEDS, ARECA NUT, GOLD AND SILVER

5-7

FINANCE MINISTER SMT. NIRMALA SITHARAMAN ATTENDS THE 5TH ANNUAL MEETING OF BOARD OF GOVERNORS OF ASIAN INFRASTRUCTURE INVESTMENT BANK

8

MONTHLY REVIEW OF ACCOUNTS OF UNION GOVERNMENT OF INDIA UPTO THE MONTH OF JUN, 2020 FOR THE FINANCIAL YEAR 2020-21

9

RBI

OPENING OF CURRENT ACCOUNTS BY BANKS - NEED FOR DISCIPLINE

10-11

LOANS AGAINST GOLD ORNAMENTS AND JEWELLERY FOR NON-AGRICULTURAL END-USES

12

August 02-08, 2020 Page 3

MINISTRY OF COMMERCE & INDUSTRY

INDEX OF EIGHT CORE INDUSTRIES (BASE: 2011-12=100) FOR JUNE, 2020

The Office of Economic Adviser, Department for Promotion of Industry and Internal Trade is

releasing Index of Eight Core Industries for the Month of June, 2020.

The growth rate of Index of Eight Core Industries for June 2020 declined by 15.0 % (provisional)

compared to decline of 22.0 % (revised) in previous month of May 2020. Its cumulative growth

during April to June, 2020-21 was -24.6 %.

Final growth rate of Index of Eight Core Industries for March’2020 is revised at -8.6 %. The Eight

Core Industries comprise 40.27 per cent of the weight of items included in the Index of Industrial

Production (IIP). Details of yearly/monthly index and growth rate is provided at Annexure.

Monthly growth rates of Index of Eight Core Industries (Overall) is depicted in the graph:

The summary of the Index of Eight Core Industries is given below:

Coal - Coal production ( weight: 10.33 per cent) declined by 15.5 per cent in June, 2020 over

June, 2019. Its cumulative index declined by 15.0 per cent during April to June, 2020-21 over

corresponding period of the previous year.

August 02-08, 2020 Page 4

Crude Oil - Crude Oil production (weight: 8.98 per cent) declined by 6.0 per cent in June,

2020 over June, 2019. Its cumulative index declined by 6.5 per cent during April to June, 2020-

21 over the corresponding period of previous year.

Natural Gas - The Natural Gas production (weight: 6.88 per cent) declined by12.0 per cent in

June, 2020 over June, 2019. Its cumulative index declined by 16.2 per cent during April to June,

2020-21 over the corresponding period of previous year.

Refinery Products - Petroleum Refinery production (weight: 28.04 per cent) declined by 8.9 per

cent in June, 2020 over June,2019. Its cumulative index declined by 18.2 per cent during April to

June, 2020-21 over the corresponding period of previous year.

Fertilizers - Fertilizers production (weight: 2.63 per cent) increased by 4.2 per cent in June, 2020

over June, 2019. Its cumulative index increased by 2.8 per cent during April to June, 2020-21 over

the corresponding period of previous year.

Steel - Steel production (weight: 17.92 per cent) declined by 33.8 per cent in June, 2020 over

June, 2019. Its cumulative index declined by 51.7 per cent during April to June, 2020-21 over the

corresponding period of previous year.

Cement - Cement production (weight: 5.37 per cent) declined by 6.9 per cent in June, 2020 over

June, 2019. Its cumulative index declined by 38.3 per cent during April to June, 2020-21 over the

corresponding period of previous year.

Electricity - Electricity generation (weight:19.85 per cent) declined by 11.0 per cent in June, 2020

over June, 2019. Its cumulative index declined by 16.1 per cent during April to June, 2020-21 over

the corresponding period of previous year.

August 02-08, 2020 Page 5

MINISTRY OF FINANCE

Tariff Notification No. 65/2020-CUSTOMS (N.T.) in respect of Fixation of Tariff Value of Edible Oils, Brass Scrap, Poppy Seeds, Areca Nut, Gold and Silver

In exercise of the powers conferred by sub-section (2) of section 14 of the Customs Act, 1962 (52 of 1962), the Central Board of Indirect Taxes & Customs, being satisfied that it is necessary and expedient so to do, hereby makes the following amendments in the notification of the Government of India in the Ministry of Finance (Department of Revenue), No. 36/2001-Customs (N.T.), dated the 3rd August, 2001, published in the Gazette of India, Extraordinary, Part-II, Section-3, Sub-section (ii), vide number S. O. 748 (E), dated the 3rd August, 2001, namely:-

In the said notification, for TABLE-1, TABLE-2, and TABLE-3 the following Tables shall be substituted, namely: -

“TABLE-1

Sl. No. Chapter/ heading/ sub-heading/tariff item

Description of goods Tariff value

(US $Per Metric Tonne)

(1) (2) (3) (4)

1 1511 10 00 Crude Palm Oil 680

2 1511 90 10 RBD Palm Oil 701

3 1511 90 90 Others – Palm Oil 691

4 1511 10 00 Crude Palmolein 707

5 1511 90 20 RBD Palmolein 710

6 1511 90 90 Others – Palmolein 709

7 1507 10 00 Crude Soya bean Oil 803

8 7404 00 22 Brass Scrap (all grades) 3717

9 1207 91 00 Poppy seeds 3623

August 02-08, 2020 Page 6

TABLE-2

Sl. No. Chapter/ heading/ sub-heading/tariff

item

Description of goods Tariff value

(US $)

(1) (2) (3) (4)

1. 71 or 98 Gold, in any form, in respect of which the benefit of entries at serial number 356 of the Notification No. 50/2017-Customs dated 30.06.2017 is availed

630 per 10 grams

2. 71 or 98 Silver, in any form, in respect of which the benefit of entries at serial number 357 of the Notification No. 50/2017-Customs dated 30.06.2017 is availed

746 per kilogram

3.

71 (i) Silver, in any form, other than medallions and silver coins having silver content not below 99.9% or semi-manufactured forms of silver falling under sub-heading 7106 92;

(ii) Medallions and silver coins having silver content not below 99.9% or semi-manufactured forms of silver falling under sub-heading 7106 92, other than imports of such goods through post, courier or baggage.

Explanation. - For the purposes of this entry, silver in any form shall not include foreign currency coins, jewellery made of silver or articles made of silver.

746 per kilogram

4. 71 (i) Gold bars, other than tola bars, bearing manufacturer’s or refiner’s engraved serial number and weight expressed in metric units;

(ii) Gold coins having gold content not below 99.5% and gold findings, other

630 per 10 grams

August 02-08, 2020 Page 7

than imports of such goods through post, courier or baggage.

Explanation. - For the purposes of this entry, “gold findings” means a small component such as hook, clasp, clamp, pin, catch, screw back used to hold the whole or a part of a piece of Jewellery in place.

TABLE-3

Sl. No. Chapter/ heading/ sub-heading/tariff

item

Description of goods Tariff value

(US $ Per Metric Tonne)

(1) (2) (3) (4)

1 080280 Areca nuts 3746”

Note: - The principal notification was published in the Gazette of India, Extraordinary, Part-II, Section-3, Sub-section (ii), vide Notification No. 36/2001–Customs (N.T.), dated the 3rd August, 2001, vide number S. O. 748 (E), dated the 3rd August, 2001 and was last amended vide Notification No. 62/2020-Customs (N.T.), dated the 27th July, 2020, e-published in the Gazette of India, Extraordinary, Part-II, Section-3, Sub-section (ii), vide number S.O. 2448 (E), dated 27th July, 2020.

August 02-08, 2020 Page 8

MINISTRY OF FINANCE

Finance Minister Smt. Nirmala Sitharaman attends the 5th Annual Meeting of Board of Governors of Asian Infrastructure Investment Bank

Union Minister of Finance & Corporate Affairs Smt. Nirmala Sitharaman attended the 5th Annual

Meeting of the Board of Governors of Asian Infrastructure Investment Bank (AIIB) through video

conference in New Delhi.

Every year at the Annual Meeting, the Board of Governors meet to take key decisions that impact

the Bank’s future. The discussions at the meeting broadly covered official business including

election of the President of the AIIB and a roundtable discussion on the theme ‘AIIB 2030-

Supporting Asia’s Development over the Next Decade’.

Smt. Sitharaman was identified as a Lead Speaker at the roundtable discussion. In her intervention,

Smt. Sitharaman appreciated AIIB’s efforts for fast tracking financial assistance of about $10 Billion

to its member countries including India to combat COVID-19 pandemic. Smt. Sitharaman

mentioned about Prime Minister Shri Narendra Modi’s initiative of creating a COVID-19 Emergency

Fund for SAARC Nations and India’s efforts in supplying critical medical health kits to tackle the

COVID-19, and now supporting global efforts of COVID-19 vaccine trials. Besides, the Finance

Minister highlighted India’s participation in the “G20 Debt Service Suspension Initiative”.

Smt. Sitharaman also outlined various measures taken by the Government of India to respond to

the COVID-19, including the $23 Billion Pradhan Mantri Garib Kalyan Yojana (PMGKP) and $295

Billion Atma Nirbhar Bharat Package (ANBP), which aim at protecting all sectors and sections of the

economy. The Reserve Bank of India eased the monetary policy especially reduced reserve

requirements and introduced liquidity in the economy to the extent of almost 3.9% of GDP.

The Finance Minister mentioned that to give a boost to the infrastructure development, India

has launched the National Infrastructure Pipeline (NIP) 2020-2025 with estimated expenditure of

$1.4 trillion that has created a plethora of fresh investment opportunities for AIIB’s partnerships.

Furthermore, she mentioned some of the expectations from the Bank, including introduction of new

financing instruments, mobilising private sector finance, providing financing for social infrastructure

to achieve the SDGs 2030, and integrating development of climate resilient and sustainable energy

access infrastructure into the recovery response to the COVID-19 crisis. Smt. Sitharaman also

suggested the Bank to establish Regional Presence which would aid in effective project

management and implementation.

The Finance Minister commended the AIIB management for the very healthy growth that the Bank

has achieved in a short span of five years and wished success to the Bank’s future endeavours.

August 02-08, 2020 Page 9

MINISTRY OF FINANCE

Monthly Review of Accounts of Union Government of India upto the month of Jun, 2020 for the Financial Year 2020-21

The Monthly Account of the Union Government of India upto the month of Jun, 2020 has been

consolidated and reports published.

The highlights are given below:-

The Government of India has received Rs.1,53,581 crore (6.84% of corresponding BE 2020-21 of

Total Receipts) upto Jun, 2020 comprising Rs. 1,34,822 crore Tax Revenue (Net to Centre), Rs.

15,186 crore of Non Tax Revenue and Rs.3,573 crore of Non Debt Capital Receipts. Non Debt

Capital Receipts consists of Recovery of Loans (Rs. 3,573 crore)

Rs. 1,34,043 crore has been transferred to State Governments as Devolution of Share of Taxes by

Government of India upto this period which is Rs. 14,588 crore lower than the previous year.

Total Expenditure incurred by Government of India is Rs. 8,15,944 crore (26.82% of corresponding

BE 2020-21), out of which Rs. 7,27,671 crore is on Revenue Account and Rs. 88,273 crore is on

Capital Account. Out of the Total Revenue Expenditure, Rs.1,60,493 crore is on account of Interest

Payments and Rs.78,964 crore is on account of Major Subsidies.

August 02-08, 2020 Page 10

RESERVE BANK OF INDIA

Opening of Current Accounts by Banks - Need for Discipline

Please refer to the circular DBR.Leg.BC.25./09.07.005/2015-16 dated July 2, 2015 on the subject. The instructions on opening of current accounts by banks have been reviewed and the revised instructions are as under:

i. No bank shall open current accounts for customers who have availed credit facilities in the form of cash credit (CC)/ overdraft (OD) from the banking system and all transactions shall be routed through the CC/OD account.

ii. Where a bank’s exposure1 to a borrower is less than 10 per cent of the exposure of the banking system to that borrower, while credits are freely permitted, debits to the CC/OD account can only be for credit to the CC/OD account of that borrower with a bank that has 10 per cent or more of the exposure of the banking system to that borrower. Funds will be remitted from these accounts to the said transferee CC/OD account at the frequency agreed between the bank and the borrower. Further, the credit balances in such accounts shall not be used as margin for availing any non-fund based credit facilities. In case there is more than one bank having 10 per cent or more of the exposure of the banking system to that borrower, the bank to which the funds are to be remitted may be decided mutually between the borrower and the banks. It may be noted that banks with exposure to the borrower of less than 10 per cent of the exposure of the banking system can offer working capital demand loan (WCDL) / working capital term loan (WCTL) facility to the borrower.

iii. Where a bank has a share of 10 per cent or more in the total exposure of the banking system to the borrower, it can provide CC/OD facility as hitherto.

iv. In case of borrowers covered under guidelines on loan system for delivery of bank credit issued vide circular DBR.BP.BC.No.12/21.04.048/2018-19 dated December 5, 2018, bifurcation of working capital facility into loan component and cash credit component shall henceforth be maintained at individual bank level in all cases, including consortium lending.

v. In case of customers who have not availed CC/OD facility from any bank, banks may open current accounts as under:

a) In case of borrowers where exposure of the banking system is ₹50 crore or more, banks shall be required to put in place an escrow mechanism. Accordingly, current accounts of such borrowers can only be opened/maintained by the escrow managing bank. However, there is no restriction on opening of ‘collection accounts’ by lending banks subject to the condition that funds will be remitted from these accounts to the said escrow account at the frequency agreed between the bank and the borrower. Further, the balances in such accounts shall not be used as margin for availing any non-fund based credit facilities. While there is no prohibition on amount or number of credits in ‘collection accounts’, debits in these accounts shall be limited to the purpose of remitting the proceeds to the said escrow account. Non-lending banks shall not open any current account for such borrowers.

b) In case of borrowers where exposure of the banking system is ₹5 crore or more but less than

August 02-08, 2020 Page 11

₹50 crore, there is no restriction on opening of current accounts by the lending banks. However, non-lending banks may open only collection accounts as defined at (v) (a) above.

c) In case of borrowers where exposure of the banking system is less than ₹5 crore, banks may open current accounts subject to obtaining an undertaking from such customers to the effect that customers shall inform the bank(s), if and when the credit facilities availed by them from the banking system becomes ₹5 crore or more. The current account of such customers, as and when the exposure of the banking system becomes ₹5 crore or more and ₹50 crore or more, will be governed by the provisions of para (v) (b) and (v) (a) respectively.

d) Banks are free to open current accounts of prospective customers who have not availed any credit facilities from the banking system, subject to necessary due diligence as per their Board approved policies.

Banks shall monitor all current accounts and CC/ODs regularly, at least on a quarterly basis, specifically with respect to the exposure of the banking system to the borrower, to ensure compliance with these instructions.

Banks should not route drawal from term loans through current accounts. Since term loans are meant for specific purposes, the funds should be remitted directly to the supplier of goods and services. Expenses incurred by the borrower for day to day operations should be routed through CC/OD account, if the borrower has a CC/OD account, else through a current account.

As regards existing current and CC/OD accounts, banks shall ensure compliance with the above instructions within a period of three months from the date of this circular.

Yours faithfully,

(Saurav Sinha) Chief General Manager-in-Charge

Encl: Flowcharts

1 ‘Exposure’ for the purpose of these instructions shall mean sum of sanctioned fund based and non-fund based credit facilities

August 02-08, 2020 Page 12

RESERVE BANK OF INDIA

Loans against Gold Ornaments and Jewellery for Non-Agricultural End-uses

Please refer to the circulars DBOD.No.BP.BC.27/21.04.048/2014-15 July 22,

2014 and DBR.RRB.BC.No.53/31.01.001/2016-17 dated February 16, 2017. Under the extant

guidelines, loans sanctioned by banks against pledge of gold ornaments and jewellery should not

exceed 75 per cent of the value of gold ornaments and jewellery.

With a view to further mitigate the economic impact of the Covid19 pandemic on households,

entrepreneurs and small businesses, it has been decided to increase the permissible loan to value

ratio (LTV) for loans against pledge of gold ornaments and jewellery for non-agricultural purposes

from 75 per cent to 90 per cent. This enhanced LTV ratio will be applicable up to March 31, 2021 to

enable the borrowers to tide over their temporary liquidity mismatches on account of COVID 19.

Accordingly, fresh gold loans sanctioned on and after April 1, 2021 shall attract LTV ratio of 75 per

cent.

Other terms and conditions of the above-mentioned circulars shall remain applicable.

Yours faithfully

(Saurav Sinha) Chief General Manager-in-Charge