Freeze asset quality norms to help borrowers, says RBI director Marathe

Norms for asset quality and provisioning should be kept on hold for the last financial year to support banks as they the help the country during a three-week lockdown for the coronavirus, director Satish Marathe has said.

Marathe, in a letter to Prime Minister Narendra Modi, said the lockdown and the economic slowdown before it have disrupted manufacturing units and crippled supply chains of all businesses.

As a part of package to revive businesses, rules relating to downgrading of borrower accounts, reporting to credit information companies should be suspended for FY20, said Marathe as industries and businesses in India are primarily financed by bank credit unlike in developed countries where it is supported by the entrepreneurs.

Banks should be allowed to reschedule all borrowal accounts, wherever necessary, without the same being downgraded, the RBI director said, adding banking entities should get freedom to fund accrued/unpaid interest, which be allowed to pay in six monthly installments commencing from October 01, 2020.

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Marathe said banks should be allowed to rework working capital limits

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Work from home a success for many companies, may become new normal

(WFH) — a strategy adopted by multinational to combat the spread of novel disease (Covid-19) — may well become the new normal as have faced success with its adoption.

With the physical world on hold and the digital world being busier than before, are now turning adversity into advantage. This period will serve as a reckoning for remote work and may help to spur on digital transformation.

“Around 25-35 per cent of the shift (to remote working) is irreversible. There will be more videoconferencing as opposed to work-related travel in the future,” said Anand Agarwal, group chief executive officer and whole-time director, Sterlite Technologies.

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He said demand, which has seen a surge of late, is expected to continue and hence, requires strengthening of the fibre network.

Agarwal said companies are planning to advance their capital expenditure towards servicing the increased internet demand by investing in network strengthening.

Almost every technology-driven task that can be done remotely is being done from a remote location.

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Understanding what to do with pensions whilst furloughing staff

Since the Government published details about its Coronavirus Job Retention Scheme, there have been many questions asked about what it means for pensions.

While we don’t yet have the complete picture about furloughing and its impact on pension contributions,  we are expecting guidance on it from the Government, HMRC and the Pensions Regulator. In the meantime Penny Cogher and Larisa Gordan from Irwin Mitchell explain what we do know:

The Government will only pay the Auto Enrolment minimum employer pension contribution ie 3% on the 80% or £2.5k per month if lower of the employee’s regular monthly wage (no commission, fees or bonus). If the employer pays more then the Government’s furloughing scheme only covers 3%, it won’t pay any extra.

  • The Government‘s scheme will not cover the employees’ auto-enrolment pension contributions at all.
  • For members who are part of a pensions salary sacrifice scheme, the 80% pay is based on the employee’s reduced salary and the Government’s scheme will only cover 3% of the salary sacrificed amount. The information that has to be provided to HMRC is all based on what goes through PAYE and so there is no allowance for salary sacrifice.
  • The 3% itself is based on

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