The public takeover offer will be subject to a minimum acceptance threshold of 50% plus one share of Covestro's capital
Question: India’s foreign exchange reserves have continued to remain at comfortable levels. Does this provide enough security considering the geo-political situation prevailing today?
ANSWER: The Reserve Bank of India is taking all precautions to ensure that economic and financial stability is not compromised in case any economic sanctions are imposed by any country. A group constituted by the central bank has suggested the internationalisation of the rupee whereby dependence on the US dollar and euro are reduced. Strong foreign exchange reserves would help to manage trade and business requirements but would not be sufficient defence against economic sanctions. It is therefore proposed to take measures for conducting trade in rupees through bilateral and multilateral trade agreements with partner countries. Payment and settlement mechanisms are proposed to be set up using the Asian Clearing Union in order to promote the rupee as a settlement currency. The government is also considering allowing foreigners to have rupee overseas accounts. Further, efforts would be made to include the rupee as part of the International Monetary Fund’s special drawing rights (SDRs). To incentivise investments by foreigners, the withholding tax on interest paid on rupee denominated ‘Masala Bonds’ is likely to be waived. The use of the Unified Payment Interface (UPI) is to be increased for cross border payments. All these measures are proposed to be introduced on the basis that the use of the rupee would add to the bargaining power of India and make the country less vulnerable to external shocks.
Question: NIFTY contracts are traded on the National Stock Exchange. I believe that from this month (July) the contracts will also be traded on the GIFT NIFTY. What is the difference between the two?
ANSWER: NIFTY contracts traded on the National Stock Exchange (NSE) are denominated in rupees while those on the GIFT NIFTY are denominated in US dollars. Indian contracts are traded from 9am to 4pm while contracts on GIFT NIFTY are traded from 6.30am to 3.40pm and then again from 4.35pm to 2.45am (all India time). Therefore, the early session makes these contracts a good indicator for investors to take a call on the NIFTY before trading starts on the NSE. Since the GIFT City is a special economic zone, all trades are exempt from the securities transaction tax and the commodities transaction tax. It may be pointed out that prior to July 3, the derivative contracts on the NIFTY Index were traded on the Singapore Exchange (SGX). This shift to GIFT City has been done under an arrangement between NSE and SGX.
Question: I am a signatory for a bank locker with a public sector bank in India. My mother is a joint signatory. We have been informed by the bank that new agreements have to be signed. Since I am working in the UAE, I have difficulty in doing so until I travel to India. Is there any way out?
ANSWER: Following a judgement of the Supreme Court given in 2021, the Reserve Bank of India has instructed banks to have customers sign new contracts. Earlier the time limit for signing the new contracts was January 2023 but this has been extended to December 2023. The revised agreement requires banks to provide indemnity in case of fire, theft and building collapse. However, the liability of the banks in case of any loss suffered by customers is limited to hundred times the annual locker rent. Stamp duty has to be paid upon registration of the new agreement. Some banks have agreed to bear this charge, but other banks are insisting that customers pay the same. If lockers are jointly operated by resident and non-resident Indians, some banks are willing to accept signed documents from the non-resident without being personally present for executing the agreement. Some private banks insist on having the agreement certified by Indian Embassies in foreign countries where the non-resident Indian can have his signature attested.
H. P. Ranina is a practising lawyer, specialising in tax and exchange management laws of India.
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