The Reserve Bank of India issued revised guidelines on Uniform Accounting for Repo/Reverse Repo Transactions.  The guidelines replace the guidelines issued in March 2003 which treated ‘repo’ as a combination of two independent sale/purchase transactions as per the legal provisions prevailing then. The accounting norms now propose to capture the economic essence of ‘repo’ as a collateralised lending/ borrowing transaction that is structured as a legal sale / purchase of securities as recognised by the RBI (Amendment) Act, 2006. The revision in the accounting norms would bring such transactions on to the balance sheet of the repo participants in its true economic sense, thus enhancing transparency.

The salient features of the revised guidelines are:

• The revised accounting guidelines will apply to market repo transactions in government securities and corporate debt securities.  These accounting norms would, however, not apply to repo / reverse repo transactions conducted under the Liquidity Adjustment Facility (LAF) with the RBI.
• The securities sold under repo would continue to be reflected in the investment account of the repo seller and would be subject to the usual mark to market valuation discipline. Accordingly, the repo buyer would not reflect the securities acquired under repo in his investment account.
• The movement of securities should be accounted for in the books of the counterparties by showing it as contra entries for the sake of greater transparency.
• The regulatory treatment of market repo transactions in government securities will continue as hitherto, i.e., the funds borrowed under market repo will continue to be exempt from CRR/SLR computation and the security acquired under market reverse repo shall continue to be eligible for SLR.  The applicability of the CRR/SLR norms for repo transactions in corporate bonds will, however, be as per the guidelines issued vide IDMD.DOD.05/11.08.38/2009-10 dated January 8, 2010.

The revised accounting guidelines for market repo will be effective from April 01, 2010.

Source: rbi.org.in

Government approved a project to connect 1500 educational institutes across the country through high speed data communication network.

A meeting of the Cabinet Committee on Infrastructure, chaired by Prime Minister Manmohan Singh, approved the establishment of the National Knowledge Network (NKN) at an outlay of Rs 5,990 crore to be implemented by the National Informatics Centre over a period of 10 years, an official spokesperson said.

“The NKN will have about 25 core Point of Presence (PoPs) and 600 secondary PoPs. It will connect around 1500 institutions,” she said adding that the setting up of core network is expected to be completed in a span of 24 months.

On 21st January, the CCI had given its in-principle approval to the project which is one of the recommendations of the National Knowledge Commission (NKC).

The network is expected to encourage sharing of knowledge, specialised resources and collaborative research.

The NKN was announced by the then Finance Minister P Chidambaram in his Budget speech of 2008-09.

Source: ddinews.gov.in

Central Board of Excise and Customs has introduced “Automation of Central Excise and Service Tax” (ACES) to improve tax-payer services. ACES is a centralized web based application which enables the assesses to electronically interface with the department. It aims to reduce paperwork, manual interface, transaction costs and increase accountability, efficiency and transparency. With the launch of ACES, assessees will be [Read More...]