Nina Varghese for IndiaProperty.com | Moneycontrol.com
Will the 2016 retrenchments in the e-commerce space impact home finance? This is a question on many minds especially in a place like Bangalore where a large number of e-commerce companies are headquartered.
In recent times there has been disturbing news in the daily broadsheets about the pink slips in the e-commerce space. Of course, as many would say this was a bubble that was waiting to burst, mainly because of the proliferation of e-commerce companies offering a variety of services and yet there has been no corresponding rise in internet penetration; in other words, an increase in net users.
In addition to this, the other bad news from the Middle East, where a large number of Indians work, is that companies are retrenching staff to combat the declining oil prices and the squeezed profit margins.
It is likely that a majority of the people who have lost their jobs this year would be paying equated monthly installments (EMIs) on homes, cars and other household items, and EMIs will be impacted.
The impact on the home loan EMI may not be immediate but it is likely in the next two quarters. This seems to be a persistent worry for the real estate sector, especially as surveys show that home sales in major metros are improving and a number of new launches are going up.
So how do you service the home loan if you have lost your job? At this point you must be aware that banks have the provision to restructure loans and that there are a number of ways to do this; all depending on the type of loan that you have taken.
The first option would be to extend the tenure of the loan; wherein your EMI reduces and makes it easier to manage. The bank, however, has to be convinced that the reason for restructuring the loan is a genuine one. The second option is foreclosure; where the borrower can sell the house which is most likely the collateral, to settle.
However, in most cities in India, the housing market is tight and it might be difficult to sell at this point. If you show undue haste, it is likely you will not get the price you desire. It is very important that you talk to the bank in question and remember that running away and defaulting on this loan and other financial commitments is not a wise choice. Most bankers understand if there is a serious issue such as a loss of employment and it is imperative that you make yourself open to them.
Let’s take a look at which companies are doling out the pink slips this year. According to newspaper reports, Flipkart, the e-retailer laid off 1000 employees pan India, in July. In September, Twitter, the online social networking services sent 20 people home, in Bangalore while OLA the online cab service sent out 700 pink slips across India, in August. ASKME’s 4000 employees lost their jobs when the company shut shop, in July, after their investor exited. GROFERS, the online grocery delivery service, laid off 150 to 200 employees and revoked 65 job offers, in September.
In the first quarter of 2017, CISCO, the e-commerce shopping list firm, is likely to lay off 14,000 people worldwide with 7000 of them likely to be engineers in the company’s Research & Development centre, in India.
According to the Middle East news service MEED, Abu Dhabi National Gas Co (ADNOC) plans to cut 5000 jobs by the end of the year while 2000 layoffs have already been announced. Similarly, many companies in the oil and gas industry in the United Arab Emirates have cut flab in a bid to reduce operational costs. The job cuts have affected mainly engineers and those on contracts. These job cuts are likely to have a domino effect on the hospitality and retail industries too.
The banking sector in the UAE has also been impacted by the declining oil prices. The Emirates Islamic, the Sharia compliant lending arm of the Emirates NBD, sacked 100 people because of the diminished growth in the second half of this year. Those laid off were mainly from the sales force.
Newspaper reports from Qatar said that many large multinational oil companies were downsizing because they were suspending or cancelling projects.
So it’s the right time to sit tight and fasten the belts tighter.
By Preeti Kulkarni & Pratik Bhakta | ET Bureau | 12 Apr, 2016, 10.24AM IST | Economic Times
Smartphones are not just useful for social media, videos and taking selfies. They will now become an important part of your daily life by doubling up as a portal for making payments, sending and receiving money etc.
Ten of the country’s biggest banks along with the Reserve Bank of India have just launched a Unified Payments Interface (UPI) — a mega app that will sit on your smart phone once you have downloaded it and dramatically reduce the cost and time taken for making simple payments. What’s more, you can use this app to pay for any transaction below Rs 1 lakh, even something as low as Rs 50.
The biggest impact of this app will be on third-party payments. Today, if you want to pay someone, you need to add him or her as a beneficiary. You need the IFSC code and bank account number and branch etc. The UPI app does away with all this. All you need is the receiver’s unique ID. Open the UPI app, select the amount to be paid, add the unique ID of the beneficiary and select ‘send’. The app will ask for a mobile pin to authenticate the payment after which it is done.
This can be useful not just in making regular payments but also in transactions between friends. You have just had a drink at the bar and want to share the bill. One person pays and the others just transfer the money to his account. No need to use cash, no need for the IFSC code and all that.
Remittances will also become easier and the same process applies here as well. Cash on delivery, the big driver behind the ecommerce boom, will probably die a natural death for people with smartphones. They can use the UPI app to pay after receiving the goods. All they need to know is the unique ID of the ecommerce firm. The buyer can also scan a QR code that the delivery boy carries through his UPI app or pay directly to the unique ID of the delivery boy.
How can a customer use UPI
1. He will need to have a bank account and a smart phone.
2. Download the UPI app of a bank from PlayStore
3. Connect the bank account
4. Create a Unique ID
5. Generate a mobile pin
6. Also link Aadhaar number
Only 10 banks are part of this now but others are expected to join. Another big feature of UPI is that you can use any bank’s systems to transfer money or make payments. You don’t need an account with that specific bank to be able to use its UPI app. All you need to do is to download that bank’s UPI app, register yourself and make the payment.
Source : http://goo.gl/oou2db
BI INDIA BUREAU | MAR 22, 2016, 12.15 PM | Business Insider
In a bid to bring global internet companies, which are believed to be avoiding taxes in India, under the ambit, Indian government is mulling to levy an ‘equalisation tax’ on them.
India thinks that Google, Facebook and Twitter, which do not have permanent establishments in the country, are making profits and they cannot also be double-taxed.
In this regard, the Indian government has found a way of earning something from the profits that these platforms have been making.
The ‘equalisation levy’ that was mentioned in the Budget 2016 will increase the cost of an array of online services.
A government-appointed panel recommended the expansion of the so-called ‘Google tax’.
In a report, the eight-member committee on taxation of ecommerce proposed that services ranging from online advertising and cloud computing to software downloads and web hosting are subjected to an ‘equalisation levy’ of 6-8% of gross payment if the provider of the service is a foreign entity without a ‘permanent establishment’ in India.
“India is challenging them: If you think credit for this 6% is so important for you, and you are deriving income from India, why don’t you set up a permanent establishment in India?” Amarjeet Singh, a partner at KPMG, told ET.
In the UK, ‘Google Tax’ is a provision that prevents technology companies from shifting profits offshore to tax havens.
While Google’s revenue from India was Rs 4,108 crore in 2014-15, Facebook’s topline was Rs 123.5 crore in the same period.
Singh of KPMG said that the levy could be open to legal challenge, and ultimately, the customer will have to pay the price. “It will flow down to the customer. None of these companies will say they will bear the cost,” he said.
Source : http://goo.gl/mu8GSt
Currently, many vendors, such as IRCTC and Bookmyshow.com, levy service charge or convenience fee on card and digital payments
BS Reporter | New Delhi | February 25, 2016 Last Updated at 09:23 IST | Business Standard
Service charge, user charge and convenience fee paid by gateways and vendors on online or card payments will be waived once steps approved by the Cabinet on Wednesday come into effect.
Also, above a threshold, one has to make payment online or through cards. The move would discourage cash payment and help tax authorities get leads on evasion. The Cabinet approved various steps in this regard to be taken in a year to two years to boost these payments.
Service charge is currently levied by payment gateways and paid to the government. The vendor using a payment gateway also pays a convenience charge. On credit cards, it is 1-2.5 per cent. The move will help the government in carrying out its financial inclusion programmes digitally. “It will help reduce transaction cost and encourage electronic mode of payment, facilitating the financial inclusion agenda of the government,” said Kalpesh Mehta, partner, Deloitte Haskins & Sells.
The official statement explained the promotion of payments through cards and digital means will be instrumental in reducing tax avoidance, migration of government payments and collections to a cashless mode. To give a perspective, 569 million transactions were made till December of the current financial year, with payments worth Rs 67.75 lakh crore.
The largest e-commerce site, Indian Railway Catering and Tourism Corporation, earned Rs 1,100 crore in 2014-15, of which Rs 350 crore was from e-ticketing. A daily 550,000 tickets were booked on the site. Other steps approved by the Cabinet include rationalisation of telecom service charges for digital financial transactions and promotion of mobile banking. The move primarily discourages transactions in cash by providing access to financial payment services through cards and digital means, went the statement. Creation of assurance mechanisms for quick resolution of fraudulent transactions and reviewing the payments system in the country have also been approved.
The infrastructure of card and digital payments is growing but remains modest in comparison to cash payments.
For card and digital payments to increase, these should be easy to use, readily available and accepted, should not impose any undue financial burden on the merchant and user, and should offer an appropriate level of security.
The evidence indicates penetration and success of card and digital payment products and services is concentrated to a large extent in tier-l and tier-ll locations, mostly to citizens with access to the formal banking channels.
Introduction of the Payment and Settlement Systems Act, 2007,s resulted in deeper acceptance and penetration of modern card and digital payment systems. An Aadhaar Enabled Payment Systems has been brought to leverage upon biometric verification and a domestic card network, RuPay.
The Reserve Bank of India recently approved licences for setting up of payments banks, with the objective of greater financial inclusion to migrant labour, low income households, small businesses and other unorganised sector entities. This would help card and online payment to spread among the poorer strata.
Source : http://goo.gl/Es1KEt
Rachel Chitra | TNN | Feb 15, 2016, 01.08 PM IST | Times of India
CHENNAI: India with more than 380 million internet users has emerged as the third-largest internet user. And nearly 60% of this user base make purchases online – a user base, whose credit history and risk profile is still unknown.
And credit rating agency CIBIL hopes to step into that gap and maintain credit scores for users of e-commerce websites just as it is currently doing for clients of India’s banks, car dealers and non-banking financial institutions. CIBIL said on Wednesday that it is in talks with the Reserve Bank of India (RBI) for bringing e-commerce customers of online payment processors like PayPal, PayTM and Citrus Pay in the loop.
The rating agency, which has been collecting and maintaining records on individual’s payments on credit cards and home, car, corporate, agricultural loans, etc, plans to now profile online customers as e-commerce picks up pace in India. Simply put, if CIBIL succeeds, then Amazon, Flipkart, Ebay and others will know the credit profile of their buyers and can plan their strategy for payment on an instalment basis and payment by cash.
CIBIL currently puts out reports based on the inputs it received from member banks and credit institutions on a monthly basis. The decision to extend its reach to e-commerce sites will bring with it challenges in terms of confidentiality of information and setting up a network with the current players in the online payment space, said Satish Pillai, CEO and MD of CIBIL.
“Thanks to the way we keep a tab on a person’s spending habits and credit history, payments and loan sanctions have become a lot faster. If you are sitting at a car dealer and waiting for the EMI amount to get clearance – real-time clearance will happen if your credit score happens to be good. So CIBIL’s credit scores make for faster risk assessment and less due diligence from the credit giver – making for faster sanctioning on loans. We are now hoping that to add additional layers of information to our existing database,” said M V Nair, chairman, CIBIL.
CIBIL also said that it is in talks with the regulator for extending this facility for customers of utility companies and telecom providers. “We are seeing a real need in this area. Say your postpaid bill with a mobile service provider has a credit limit of Rs 500 – if CIBIL scores come into play in that arena – and say your credit history is good – then it could be instantly raised to Rs 2,000 without any need for a check from the service provider. CIBIL scores would make for seamless transaction with greater ease and smoothness,” said CIBIL’s Pillai.
“The current system of sending a person to come and verify the address, customer profile and authenticity of documents will get outdated. It costs time, labour and money. With CIBIL, the utility or telecom provider would have all the information that they would need a click away,” he added.
Source : http://goo.gl/H06Kss