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Monday,17-January-2022

Business

Petrol and diesel prices unchanged for 3rd straight day

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Petrol

The rise in the prices of petrol and diesel has paused for the last three days as oil marketing companies (OMCs) have decided to wait and watch the developments on global oil market before finalising their India retail strategy.

The OMCs kept the pump price of petrol and diesel unchanged on Tuesday. With this, petrol continues to be priced at Rs 91.17 a litre and diesel Rs 81.47 a litre in the national capital.

Across the country as well, petrol and diesel prices remain unchanged.

Sources in OMCs said that price pause on Tuesday followed subdued movement in product price in global markets. The crude oil, which has been on fire for the last couple of weeks, has also shown some downward movement lately, staying at less than $63 a barrel now.

Petrol and diesel prices have been rising continuously since February 9. In the 14 increases since then, prices have gone up by Rs 4.22 per litre for petrol while diesel rate has risen by Rs 4.34 a litre in Delhi.

The increase in the previous weeks has taken petrol past the historic high levels of Rs 100 a litre in several cities across the country.

In Mumbai, petrol prices is just Rs 2.4 per litre short (Rs 97.57 a litre) of touching the three-figure mark of Rs 100 per litre for the very first time ever. Diesel prices in the city are closing on Rs 90 a litre (Rs 88.60 a litre).

In all the other metros, petrol is over Rs 90 a litre-mark, while diesel is well over Rs 80 a litre. Premium petrol had crossed Rs 100 per litre mark in several cities in Rajasthan, Madhya Pradesh and Maharashtra a few days back.

Since fuel prices are benchmarked to a 15-day rolling average of global refined products’ prices and dollar exchange rate, pump prices can be expected to remain northbound over the next few days even if crude price stabilises.

Petrol and diesel prices have increased 26 times in 2021 with the two auto fuels increasing by Rs 7.46 and Rs 7.60 per litre, respectively, so far this year.

Oil company executives said that petrol and diesel prices may increase further in the coming days as retail prices may have to be balanced in line with global developments to prevent the OMCs from making a loss on sale of auto fuels.

Business

Credit Suisse chief resigns after attending Wimbledon in breach of Covid rules

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 Antonio Horta-Osorio, Chairman of the global banking giant Credit Suisse, has resigned with immediate effect after he was reportedly found to have broken the UK’s Covid-19 quarantine rules, the BBC reported.

A former boss of Lloyds Banking Group, Horta-Osorio joined Credit Suisse after a series of scandals at the Swiss bank.

After being the chairman of Credit Suisse for just eight months, he has now been replaced by board member Axel Lehmann.

“I regret that a number of my personal actions have led to difficulties for the bank and compromised my ability to represent the bank internally and externally,” Horta-Osorio said in a statement issued by the bank.

“I therefore believe that my resignation is in the interest of the bank and its stakeholders at this crucial time,” he added.

A preliminary investigation by Credit Suisse had found that Horta-Osorio reportedly attended the Wimbledon tennis finals last July when the UK’s Covid-19 rules required him to be in quarantine, the report said.

He was brought in to lead Switzerland’s second-largest bank to help clean up a corporate culture marred by its involvement with collapsed investment company Archegos and insolvent supply chain finance firm Greensill Capital.

In February 2020, then-Credit Suisse chief executive Tidjane Thiam resigned after a scandal revealed the bank had spied on senior employees, the report said.

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Business

Union Budget 2022: Tax rebates in Budget for realty vital for salaried class

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Currently, one-third of India’s population reside in cities and it is estimated to go up to 50 per cent by 2030. There is a steady rise in the number of households with a shift towards nuclear families and increased urbanisation.

The 66 per cent young population – below 35 years of age, are emerging as young millennial borrowers of home-loans. It is also true that home-loans market is driven by young borrowers within the age group of 26-35 years – about 25 per cent and also by people in the age group of 36-45 years – about 28 per cent. These are all active home-loan audience and jointly account for 53 per cent of annual originations.

The average ticket size of a home-loan of young borrowers has continued to increase over the last 5 years, with a CAGR of 6.2 per cent. The ticket size continues to increase more for women than men. The cumulative active home-loan base of these borrowers has seen continuous growth over the last 3 years at a CAGR of 3.5 per cent.

These young borrowers have been the reason for change in the home-loan market.

Within the affordable segment, volume growth in home-loans of Rs 15-35 lakh, over the last 4-5 years, indicate shifting preferences of buyers towards higher ticket sizes. Rural Housing demand for mid-range and higher ticket sizes has continued to increase over the last 5 years too. Share of annual originations (volume) of Rs 35-75 lakh ticket size has increased by 4 per cent in the last 5 years. Share of annual originations of Rs 75 lakh plus ticket size has increased from 0.37 per cent to 0.87 per cent in the last 5 years.

Share of annual originations of Rs 15 lakh ticket size has declined over the last 5 years, largely due to falling demand for very small ticket size segment of Rs 2 lakh.

The dearth of disposable income has been a deterrent factor for salaried class towards taking home-loan and buying real-estate. Since the input cost in real-estate has increased the rates, the salaried class is left with no other option but to approach for home-loans from financial institutions. Interestingly, the tenure of repayment of home-loan is fluctuating between 11-30 years.

There is also a deterrent factor for salaried class in home-loans and EMIs. The EMIs are no more supportive since the financial institutions first draw larger part of interest in the EMIs and principal component is kept less in more than first 50 per cent of the EMIs. As the EMIs near completion, the interest component becomes negligible and principal component is much higher.

Even if the buyer has the provision of pre-payment of home-loan, he ends up paying the larger portion of principal amount rather than saving on the interest. Further, the financial institutions also levy heavy fees on pre-closure of loans. In case the buyer opts for higher tenure for loan repayment, it then makes it difficult for the buyer to invest in second property.

One question that has been asked frequently is – “If the principal and interest amount are predefined, why the EMIs can’t have equal amount throughout the tenure.”

Coming to tax benefit, repayment of principal amount in a home-loan qualifies for deduction under section 80C, which has an upper limit of Rs 1.50 lakh per annum. Since the same section – 80C, accounts a number of other investments including PF, PPF and life insurance policies etc, it becomes impossible for a buyer to take advantage of any benefit out of this section.

Buyers are looking forward to increase in this limit in Union Budget-2022 since this limit has not been increased in last many years.

On the tax benefit for interest payment, since under section 20(b) of the Income Tax Act, there is a cap of Rs 2 lakh per annum on the interest part of the home-loan, home-loans being larger in size, the buyers are unable to take much benefit of the same too. To extend tax benefit to the buyers the government has also added few sub-sections 80EE, 80EEA under the Income Tax Act but the volume of loan is not allowing buyers to gain desired additional benefits out of these sub-sections.

What perhaps needed in the Union Budget 2022 is to bring dynamic changes in the income-tax slabs and increase the rebates under section 80C, 80EE, 80EEA and 24(b) of the Income Tax Act.

One of the greatest philanthropists Andrew Carnegie said – “Ninety percent of all millionaires become so through owning real-estate.” Andrew Carnegie is one of the five people who built America, the other four being Cornelius Vanderbilt, John D. Rockefeller, J.P. Morgan, and Henry Ford. Harv Eker, an author and businessman, known for his theories on wealth and motivation said – “Don’t wait to buy ‘real-estate’, buy real-estate and wait”. These two statements said all about owning real-estate and what it could mean to a buyer.

Globally, investment in real-estate is directly related to the future of a buyer and also growth of the economy, and so be in India.

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Business

Equities rise for six straight sessions

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The 30-scrip Sensitive Index (Sensex) and broader 50-scrip Nifty on the National Stock Exchange extended its gains from the past week and traded in the green in early trade on Monday.

Notably, indices had been gaining for the past six trading sessions.

At 10.15 a.m., Sensex traded at 61,288 points, up 0.1 per cent from the previous close of 61,223 points. It opened at 61,219 points.

Nifty traded at 18,280 points, up 0.1 per cent from the previous close of 18,255 points. It opened at 18,233 points.

Top gainers during the early trade were Hero MotoCorp, ONGC, Maruti Suzuki, Tata Motors, Adani Green Energy.

HCL Technologies, GAIL (India), ACC, Adani Transmission, and NMDC were some of the top losers, NSE data showed.

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