Lloyds TSB

The fact that the bank can raise such enormous funds in the private sector is a sign of growing confidence in its prospects.

According to the Daily Mail, Lloyds already has 27billion ordinary shares in issue, and will need to issue billions more.

Its stock market value is £23.5billion, and it wants to raise £13.5billion in fresh cash.

It will need to price these shares at a discount to the current price, and says this will be at between 38 per cent to 42 per cent of the planned ex-rights price.

The government, which will underwrite its own 43 per cent stake, could get around £130million in underwriting fees.

Bank of America Merrill Lynch, Citigroup and UBS could get tens of millions for helping lead the rights issue with smaller payouts to Goldman Sachs, HSBC and JP Morgan Cazenove.

More recently the Guardian reported that the Lloyds Banking Group, which is 43.5% owned by the taxpayer, will reduce its mortgage business by 19% and its current account business by 4.6%. To do this it will sell the former TSB business, Lloyds TSB Scotland, the business run under the Cheltenham & Gloucester brand, and its online business Intelligent Finance. At least 600 branches are set to be sold, as well as the mortgage, current account and savings books associated with them.

It has been hailed as a win-win budget by all, barring the few crtitics that are there to find the cons in each year’s financial plan. P. Chidambram has ensured a populist financial plan, with gains galore for the poor and the middle class.

Following are 21 highlights of India’s Union Budget for 2008-2009:

1. Changes in I-T slab. Threshold of exemption for all Income Tax assesses raised from from Rs 1,10,000 to Rs 1,50,000.

2. Every income tax assessees to get relief of minimum of Rs 4,000.

3. No change in rate of surcharge.

4. New tax slabs will be: 10 per cent for Rs 150,000 to Rs 300,000, 20 per cent for Rs 300,000 to Rs 500,000 and 30 per cent above Rs 500,000.

5. For women, the income tax limit goes up from Rs 1.45 lakh to Rs 1.80 lakh. In case of senior women citizens, it increases from Rs 1.95 lakh to Rs 2.25 lakh.

6. Fresh facilities, encouragement to sports and guest houses exempted from Fringe Benefit Tax.

7. Five year tax holiday for setting up hospitals in tier II and tier III regions for providing healthcare in rural areas from April 1, 2008.

8. Five year tax holiday for promoting cultural tourism.

9. Short-term capital gains increases from 10 per cent to 15 per cent.

10. Commodities Transaction Tax to be introduced on the lines of Securities Transaction Tax.

11. Banking cash transaction tax withdrawn from April one, 2009.

12. Direct tax proposals to be revenue neutral. Indirect tax proposals to result in loss of Rs 5,000 crore.

13. Rs 500 crore for corpus fund to subsidise all women Self Help Groups for LIC [Get Quote] cover for permanent disability.

14. Agricultural loans given by scheduled commercial banks, regional rural banks and cooperative credit institutions up to March 31, 2007 and due for December 31 that year will be covered under the waiver scheme to address the problem of indebtedness.

15. No change in corporate income tax.

16. To protect tigers, Rs 50 crore for National Tiger Conservation Programme. Bulk of it to be used to raise Tiger Protection Force.

17. Plan expenditure fixed at Rs 2,43,000 crore and non plan expenditure at 5,74,000 crore.

18. Fiscal deficit pegged at 3.1 per cent and revenue deficit at 1.4 per cent.

19. Tax to GDP ratio increased from 9.2 per cent in 2004-05 to 12.5 per cent 2007-08.

20. Duty on non filter cigarettes to be raised.

21. Customs duty on specified life saving drugs reduced from ten per cent to five per cent.

Chidambaram said keeping inflation under check is one of the cornerstones of the government’s policy. GDP growth, he said, has slowed to 8.4 per cent during the quarter ended December 31, 2007 as compared to 9.1 per cent a year ago.

However, the finance minister added that the economy grew over eight per cent over 12 successive quarters since 2005.