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This channel provides daily analysis of Economy news relevant for UPSC/RBI/SEBI/ NABARD etc.
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A lot of students are asking me whether 'Securities Transaction Tax (STT)' is a direct tax or indirect tax?
Ans - It is a direct tax and I have attached the proof from Govt. sources above.
Taxes on Income comes under direct tax.
13.7K viewsedited 17:13
The above article has explained the Silicon Valley Bank (SVB) crises very well. I would just like to add on the concept part.
Suppose the market interest rate is around 6% and corporates issued bonds (at a coupon/interest rate of 6% and face value Rs. 100) to raise funds and these bonds were purchased by banks (so basically banks are investing the depositors money into bonds).
Now if Central Bank increases the interest/repo rate (to control inflation) then the interest rate in the market will go up and the new bonds will be issued at a higher interest/coupon rate lets say 8% [In a very short span in the last few months interest rates has increased quite a lot]. So now, no investor will purchase the old bonds (in the secondary market) as it is offering a lower interest rate of 6% as compared to the new bonds offering 8%. But there can be a case where investors will be willing to purchase old bonds, if it is offered at a lesser price (than Rs. 100). So basically, when interest rate in the market goes up, the price of the previously issued bonds goes down and this leads to a decline in the capital base of the investors (SVB Bank) who had purchased these bonds.
Source: Indian Express
The above is news from today's Indian Express along with my note.
Startups operating in India have their parent (holding) company are based/registered in US and through this holding company startups have raised funds abroad/US in dollars and they had parked funds in US in SVB bank. Now as SVB bank has collapsed, so these holding companies can open account in the Indian Banks operating in GIFT-SEZ (IFSC) and can transfer the funds from SVB Bank to Accounts in IFSC and these deposits will be in dollars. [Indian companies/individuals cannot keep dollars in their deposits]
The Indian Banks which will be holding these deposits can invest these (dollar) funds in the External Commercial Borrowing (ECB). Let me explain.
When Indian companies borrow from abroad it is treated as ECB. But IFSC is treated as a foreign territory. So, now if Indian companies are borrowing from the banks having accounts in IFSC (holding startup deposits in dollars) then it will be treated as ECB.
The banks holding the deposits (dollars) in IFSC an also lend in forex market and oil companies for importing oil.
The above is news from today's Indian Express along with my notes.
HDFC Bank and UCO Bank are basically 'Correspondent Banks' and they have opened account of foreign banks (like Gazprom, Sberbank, VTB Bank). These accounts with (HDFC, UCO) will be treated as 'Vostro' by HDFC and UCO and will be treated as 'Nostro' by Gazprom, Sberbank and VTB Bank.
If there is a surplus balance in these accounts, then it can be invested in Indian Govt. securities also.
7.6K viewsedited 04:21
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