Faced with mounting public outrage in Cyprus and hostile reaction from global financial markets, the euro zone finance ministers have decided to ease the conditions of a bank levy for small savers, which was agreed last Saturday as part of a 10 billion-euro (13 billion dollars) bailout for the debt-stricken nation.
The ministers of the 17-nation euro group agreed at an emergency conference call on Monday night that small depositors on the Mediterranean island should be treated differently under the bank levy plan approved by all member-nations.
They agreed that the Cypriot Government would introduce progressivity in the one-off levy, meaning that it can shift the tax burden from savers below 1,00,000 euro level to large deposit holders.
The finance ministers did not specify how this could be achieved, but one proposal is to increase the levy for deposits of about 1,00,000 euros to more than 12 per cent and to introduce a tax-free threshold up to 20,000 euros.
However, the Government will have to fulfil its commitment to raise 5.8 billion euros to secure the bailout.As per the plan agreed last week depositors up to 1,00,000euros would have to pay a one time levy of 6.75 per cent and those above that level will be charged 9.9 per cent.
Their decision unleashed massive protests in Cyprus and and sent shares tumbling in Asia and in Europe.
A meeting of the Cypriot parliament in Nicosia to vote on the bailout deal was postponed twice as the newly-elected government of president Nicos Anastasiades scrambled to get sufficient majority to pass the legislation.
A vote is now scheduled for Tuesday evening and the President, who took over only a week ago, is under intense pressure to announce changes to the tax plan before Parliament convenes.
Fearing a run on banks, the government ordered that banks will remain closed for two more days after Monday's public holiday "to safeguard the stability of the financial sector".
The proposed levy on bank deposits to finance a bailout is unprecedented in euro zone's three year history of bailouts and it sent shivers across the 17-nation single currency area.
Investors were concerned that it could plunge the euro zone into fresh turmoil after several months of relative calm.
Politicians in several euro zone member nations expressed fears that it may set a precedent for future bailouts.
The finance ministers defended the bank levy plan and affirmed that it is a one-off measure.
Together with international financial support, ”this measure will be used to restore the viability of the Cypriot banking system and thereby safeguard the financial stability in Cyprus”, President of the euro group Jeroen Dijsselbloem said in a statement after the conference call.
PTI n Mumbai
Market regulator Sebi has issued a framework on 'product labelling' with colour coding for mutual funds, a move that would help investors assess the risk associated with the schemes.
The guidelines would be effective from July 1, 2013, for all existing and forthcoming schemes, Securities and Exchange Board of India (Sebi) said in a circular
As per the norms, product labels carrying details about the schemes would be disclosed on the front page of initial offering application forms.
Besides, the labels would have to be placed in common applications forms and advertisements. The regulator has also decided up on colour codes to indicate the level of risk associated with the product.
A blue colour coded box would indicate low risk, yellow would signify a medium risk, while brown would be represent schemes with high risk, Sebi said.
"In order to address the issue of mis-selling, a committee was set up to examine the system of product labelling that would provide investors an easy understanding of the kind of product/scheme they are investing in and its suitability to them," Sebi said.Based on the recommendations by the committee, it has been decided that all the mutual funds would 'label' their schemes on certain parameters, it added.The labels would include details about the nature of schemes "such as to create wealth or provide regular income in an indicative time horizon (short/ medium/ long term)".