Petrol costlier in India than in Pakistan, Bangladesh, Sri Lanka, US

Source :DNA :Nov 29, 2011, 19:34 IST 

Petrol costs more in India when compared to neighbouring countries like Pakistan, Bangladesh, Sri Lanka and is even dearer than what is charged in the US, the petroleum ministry said in a written reply in the Rajya Sabha Tuesday.

According to the reply by Minister of State for Petroleum RPN Singh, one litre of petrol costs Rs48.64 in Pakistan, Rs52.42 in Bangladesh and Rs61.38 in Sri Lanka. In India, the fuel costs Rs66.42, despite oil marketing companies reducing prices Nov 16.

Even in the US, petrol costs much less -- at Rs44.88 a litre.

However, the fuel costs much more in the UK, with a litre of petrol going for Rs104.60.

The government has always been criticised for the skewed tax structure on petrol and diesel. The minister, however, said the central government's revenue does not increase with increase in the price of these products as the excise duties were specific.

The excise duties on petrol are currently at Rs14.78 per litre, and on diesel Rs2.06 per litre, said Singh.

After the last downward revision of Rs2.22, petrol now retails at Rs66.42 in Delhi. However, diesel costs much less at Rs40.91 in the national capital.

But states levy a host of other taxes such as sales tax, value added tax (VAT) and entry tax.

"Whenever there is an increase in retail selling prices of these petroleum products, the state governments' sales tax/VAT collection goes up correspondingly," Singh said.

Illustrating the states' increase in revenue due to hike in fuel prices, the minister said for every Re1 increase in petrol price per litre, the Delhi government raked in 20 paise as the VAT rate in Delhi was 20 percent.

Similarly, for every Re1 increase in price of a litre of diesel, the Delhi government raked in 12.5 paise in taxes as the VAT rate for the fuel was 12.5 percent.

Doha Bank expects India licence soon: CEO

Source :DNA :Nov 29 2011 8 00 IST

Reaching every unbanked Indian is more important than liberalising policies in India today, believes R Seetharaman, chief executive officer, Doha Bank. He spoke with Vishwanath Nair and Neelasri Barman about the benefits of banking in the Gulf states, the features of Islamic banking and the challenges associated with the business. 

Excerpts from the interview:

What is the difference between interest rates charged to corporates in Qatar and India? What are the other challenges that Indian corporates face in Qatar?
Qatar is very cost effective. Corporates are charged at least 5-6% lower than in India. The maximum interest rate for a highly rated company is 6%; here you pay a prime rate of 10%. We are parity linked to dollar. If I can borrow money at 3% in the international market, why would I stretch my margins beyond? In the Gulf, the opportunities are more than challenges because you have a) proximity b) you can partake in the economic progress of these countries, which are doing very well. They are running projects worth of trillions of dollars. So the opportunities are definitely more. The challenge is that you have to integrate people and you have to get skilled labour.

Do you think the Indian banking regulator is more stringent than the regulator in Qatar? Do you think the Indian regulators need to be a little more liberal in their policies?
I think the Indian regulator is right in forming its governance in the right direction. This has proven to be the correct model now. I would not use the word liberalisation; I would say we’re grossly under-banked, so re-regulation is a better model than deregulation. A financial institution needs to have a long-term view; you cannot have a short-sighted policy. For re-regulation we need more financial inclusion, every average citizen needs to have a bank account. This gives you a sense of security and self-discipline, it also gives you a certain purchasing power. There is nothing wrong in putting an interest rate cap, nothing wrong in putting a lending cap, this will only discipline your system.

When are you hopeful of a foray into India?
We had applied for licence in April 2005. We followed it up. They wanted reciprocity and for Indian banks to come there. Now two Indian banks (ICICI Bank and State Bank of India) are there in Qatar financial centre. Then they expected us to resubmit the application which we did last year in April. So I expect the licence anytime so that I can add value. Currently, I have exposure of over $2 billion to Indian financial institutions and Indian corporates around the world as on September 30, 2011. This forms a part of the total asset base of around $15 billion. In addition to that I am remitting to India. If I get a branch over here I can lend directly to Indian corporates. We would like to open a branch in Mumbai.

Qatar has a public-private partnership model in banking. Do you think that should be followed even in India to facilitate financial inclusion?
Yes. That is the way out. This kind of partnership can give you a lot of transparency and governance. It is also going to add value in terms of gross welfare for the masses. This is a better form of management and has proved to be more resilient, stable and functional than what individual institutions do.

What kind of non-performing asset levels do you see in Qatar banks? How do you manage it?
We have 1.8% non-performing assets in the system. When you deal with global communities, you have to have clear arrangements in terms of collection efforts. You have to go through agencies around the world. We have a contract with these agencies and give them the details of the customer. They try, or sometimes these agencies collude with the customers and share the money between each other, leaving the bank in the lurch. It’s a risky business, but we have maintained our NPAs.

Since you have an experience in Islamic banking, do you think it should be permitted in India?
Islamic banking is equity financing than debt financing. In that, asset backed securitisation is a must. It is also useful for sustainable long-term financing. It is a good business model. But I would not like to comment on the government policy and framework.