News

Direct Tax issues on convergence of IFRS with Indian Accounting Standards

Central Board of Direct Taxes (CBDT) and accounting rule-maker Institute of Chartered Accountants of India (ICAI) have jointly constituted a study group to identify and address direct tax issues that will affect convergence of India’s accounting standards with International Financial Reporting Standards (IFRS).With IFRS convergence due for April 2011 and the government coming up with [...]

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Automatic FDI route to close for 10 sectors

by R. Venkata Subramani

Keen to beef up national security, the government plans to slap new entry route restrictions on foreign direct investment (FDI) beyond 49% in eight specified “sensitive” sectors, including airports, seaports, pharma, petroleum refining and gas pipelines. In all these sectors, 100% FDI through the automatic route is permitted now.Once a stricter policy is in place, [...]

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SEBI extends stock lending, borrowing tenure to 12 months

by R. Venkata Subramani

The Securities and Exchange Board of India (SEBI) has extended the tenure of contracts for stock lending and borrowing (SLB) up to a maximum period of 12 months, as it tries to revive the comatose segment.SLB was introduced in April 2008, starting with a contract tenure of seven days. With hardly any interest from market [...]

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Hedge Accounting for equity options – free online course

by R. Venkata Subramani

Dear Professional members, Hedge Accounting for Equity Options – a free online course is now available at Free Online Courses on Accounting Hedge Accounting for equity options iscovered by Accounting Standards (AS 30 in India and IAS 39 under IFRS). This course explains the following concepts. Topic 1: Accounting Standards for Hedge Accounting Lesson1 – [...]

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BlackRock engaged in discussions with Barclays Bank plc

by R. Venkata Subramani

As per the press release issued by BlackRock, Inc., it confirmed that negotiations are ongoing with U.K.’s third-largest bank, Barclays Bank plc, about the potential purchase of Barclays Global Investors (BGI), including the iShares business. The negotiations are ongoing and there is no certainty that any transaction will be agreed upon or, if agreed upon, [...]

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Meaning of Securitization

by R. Venkata Subramani

It is an innovative fund raising process which came into existence in the late 1970′s and has multiplied phenomenally over the years. The crux of the concept on which this process is based is the grouping or pooling of assets with predictable and pre-defined cash flows structure or rights on future expected cash streams and [...]

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Securitization Practices – Crystallization of the crisis

by R. Venkata Subramani

Once mortgage backed securities started flooding the markets, the banks and financial institutions also resorted to securitization of the pool of assets to shift the risk to investors in these securities as well as to obtain funds well ahead of the scheduled tenor of these assets. This implied that originators/issuers could repeatedly re-lend a given [...]

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Leveraging on the bubble in sub-prime crisis

by R. Venkata Subramani

During 2004 to 2007, further to the drop in interest rates, many investment banks opted to leverage on the situation as they found it beneficial to raise large amounts of debt at cheaper rates and invest in mortgage backed securities on the impression that housing boom will continue. During the boom the traders in Wall [...]

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Federal Reserve policies in sub-prime crisis

by R. Venkata Subramani

Lowering of interest rates in the early 2000s was taken up by the Federal Reserve to negate the effect of the Information Technology bubble earlier based on the premises that the rate could be lowered as long as the inflationary pressure was being kept low. The low interest rates contributed to the housing bubble.

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Government Policies in sub-prime crisis

by R. Venkata Subramani

US government got more inclined towards the mortgage industry to make home purchases more favorable and ended up fanning the boom by relaxing lending standards of Fannie Mae and Freddie Mac. This has increased the ownership in residential mortgages of the government sponsored enterprises viz. Fannie Mae and Freddie Mac to a staggering $5.1 trillion. [...]

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