The government and the Reserve Bank of India (RBI) are “on board” with respect to the issue of cryptocurrency, even as discussions are going on the matter of digital virtual currencies, Finance Minister Nirmala Sitharaman said at a press conference on Monday.
She was speaking after having addressed the Central Board of Directors of the RBI in its customary post-budget meeting.
Sitharaman also said that there was a “lot of positivity” around the upcoming initial public offer (IPO) of Life Insurance Corporation. With the government planning to sell its 5 per cent equity, the LIC IPO is expected to the biggest in the Indian capital market. “A big decision like this is never a knee-jerk reaction. It is done with consciousness… And I can see after the announcement, the reception, there is a buzz in the air,” Sitharaman said.
LIC filed its draft red herring prospectus (DRHP) with the markets’ regulator on Sunday.
On the issue of taxation and regulation of cryptocurrencies, she said, “RBI, government are onboard, discussions are going on. Whatever decisions government or RBI takes, will be taken after discussions. We are all discussing prior to the Budget, discussion continues and we shall continue to have discussions. All the decisions which have been taken on it, obviously it has a very serious, it is a digital currency from the central bank of some description, so obviously with more focus having had consultations.”
Reiterating the central bank’s serious concerns over cryptocurrencies, RBI Governor Shaktikanta Das had last Thursday said these are a big threat to the country’s financial and macroeconomic stability. He had also warned investors that cryptocurrencies do not have any underlying asset, not even a tulip.
The Union Budget 2022-23 has proposed a 30 per cent tax on private cryptocurrencies and non-fungible tokens.
To another query on whether the plan to include government securities in international bond indices is being held back, Das on Monday said the work and process is underway with regard to this proposal. “Inclusion in the global index is a process and earlier fully accessible route was introduced whereby certain G-sec, it is fully accessible to the foreign investors. We are moving towards that it is work in progress so far as inclusion in index is concerned,” he said.
Das said the issuance of green bonds, another proposal for the next year’s Budget, will widen participation of investors in the Indian market. “With regard to green bond…cash and debt management group will meet next month and they will plan for it. The main rationale behind going for green bond is that world over there are lot of investors who have dedicated funds to invest in green bonds. So basically when you float a green bond which has a specified and dedicated purpose, when you float a green bond you are basically widening the participation of international investors in the domestic bond market…,” he said.
Meanwhile, responding to a query on whether the CBI has been slow in taking action in ABG Shipyard case, Sitharaman said bankers actually took “lesser than what is normally an average time to detect these kinds of frauds.” The CBI Saturday said it has booked ABG Shipyard Ltd (ABGSL) and its directors for fraudulent loan default to the tune of Rs 22,842 crore.
“This is actually an account which became an NPA in November 2013. After that, because it is a consortium of banks who had a business with them, they had all sat together to see how best restructuring can be done, which is due process done for any account under stress more so it is a big account and also becoming a NPA. So that initiative was taken by the consortium, SBI had been the lead, ICICI Bank is another big bank, all of them sat together and started working on it. So 2014 onwards this process was going on,” she said.
“For any account details and the element of fraud or element of any kind of major letting down of banks almost takes 52-54 months to be fully with all the intensive work that should happen and therefore when you are coming in this particular case with that kind of measurement actually I should say to the credit of the banks they have taken lesser than what is normally an average time to detect these kinds of frauds,” the finance minister added.
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