Banks take lead from RBI, cut rates
Mumbai: Following Reserve Bank of India's recent announcement reducing the interest rates, the country's leading commercial bank, State Bank of India, reduced its prime lending rates (PLR) by 50 basis points to 11.50 per cent.

IDBI and IFCI also followed suit by reducing their rates by 100 basis points to 12.50 per cent, their lowest ever rates in the past decade.

Both SBI and IDBI have retained their maximum spread at 3.5 percentage points over the PLR. SBI has also reduced its short term advance rate for loans below one year by 75 basis points to 11.25 per cent.

Parallely, the commercial giant has reduced the rates offered on its deposits by 50 basis points on deposits upto one year, 100 basis points on deposits maturing between one and three years and by 50 basis points on deposits with maturities beyond three years. The chairman of SBI, Mr. G. G. Vaidya, has expressed fears that this rate cut on deposits would see a flight of money away from banks to more attractive avenues like mutual funds.

Other leading banks are expected to announce their reaction to the RBI rate cuts in the course of the week.
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Income tax issues FIIs' notices on misuse of Mauritius tax treaty
Mumbai: In a move that is likely to cause severe damage to already depressed stock markets, the income tax authorities have issued notices to 11 foreign institutional investors (FIIs') and disallowed the tax benefits under the Mauritius tax treaty that these FIIs were availing of.

The notices which has slapped a tax demand running into several crore rupees have been issued by the department on the grounds that the FIIs have been misusing Mauritius as a tax avoidance tool. The department's contention is that these institutions were merely registering themselves in Mauritius for tax purposes and were not eligible for any of the benefits under the double tax treaty with that country.

FIIs', on the other hand, contend that they are well within the laws of the land in their operations and that they are being targeted because the tax authorities have fallen way behind in their collections for the year.
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