Mumbai: The board of Securities and Exchange Board of India (Sebi) on Wednesday cleared big-bang market reforms, including a move to replace the two-decade-old insider-trading rules with the new prohibition of insider trading (PIT) regulations, and amending the existing delisting regulations. Additionally, Sebi approved new reforms in consent mechanism under which it will give entities found violating securities laws the option of settling the matter before the issue of showcause notices and start of enforcement proceedings. This will be done by way of basic notices stating the probable action. The regulator, however, clarified this arrangement would be only for minor violations. According to a press statement from the market regulator, the rules around insider trading have been strengthened by clearing new definitions of unpublished price-sensitive information (USPI), insider and connected persons. An insider would now mean a person who is in possession of or has access to price-sensitive information. The PIT regulations of 1992 defined a connected person on the basis of the position held by him; in the new regulations, the definition would include immediate relatives. http://www.business-standard.com/article/markets/sebi-board-clears-big-ticket-market-reforms-114111901032_1.html
FM TO MEET PSU BANK CHIEFS TODAY
Finance Minister Arun Jaitley will meet heads of public sector banks on Thursday to review their performance for the second quarter ended September 30. “Issues of capital adequacy, non-performing assets (NPAs), recovery, stalled projects, new projects and financial inclusion will be discussed, among others,” the finance ministry said in a statement. Other major issues on the agenda include overall credit growth with particular reference to agriculture credit, credit to small and medium enterprises, housing loans, education loans, lending to minority communities and weaker sections of the society. Performance with regard to Pradhan Mantri Jan Dhan Yojana, Direct Benefits Transfer and Unique Identification Authority of India might also be reviewed in the meeting. This will be the first quarterly review meeting of new Financial Services Secretary Hasmukh Adhia with the chief executive officers of public sector banks and financial institutions. http://www.business-standard.com/article/economy-policy/fm-to-meet-psu-bank-chiefs-today-114112000030_1.html
FINMIN ASKS LIC TO SPEED UP EXECUTION OF LIFE COVER
New Delhi: The Finance Ministry has directed Life Insurance Corporation (LIC) to immediately operationalise the life cover benefit under the Pradhan Mantri Jan Dhan Yojana (PMJDY). It has been asked to expeditiously enter into a memorandum of understanding (MoU) with the Indian Banks’ Association (IBA) for providing this facility, official sources said. PMJDY is the flagship financial-inclusion programme of the Narendra Modi-led Government being undertaken on mission mode. Contrary to its earlier stance, the Finance Ministry has now said that the National Payments Corporation of India (NPCI) would not be required to enter into an MoU with LIC and IBA for providing life cover benefit. During the launch of the scheme on August 28 in the Capital, Prime Minister Narendra Modi had announced life cover of Rs. 30,000 with the RuPay card to all those who subscribe to a bank account for the first time during the period August 15 to January 26 next year. Under the recently framed guidelines for life cover, the Finance Ministry had specified that an agreement with LIC, IBA, NPCI and Department of Financial Services will have to be executed to operate the scheme. But now the Finance Ministry wants NPCI to be out of this arrangement and has directed LIC to operationalise the life cover through an MoU with banks. http://www.thehindubusinessline.com/todays-paper/tp-money-banking/jan-dhan-scheme-finmin-asks-lic-to-speed-up-execution-of-life-cover/article6616249.ece
GUARD AGAINST RETAIL ASSET BUBBLE: RBI TO BANKS
Mumbai: The Reserve Bank of India (RBI) has sounded early warning bells to banks, which are aggressively pushing retail credit. The central bank raised concern over the credit absorption capacity of the retail borrower and advised lenders proper monitoring. SS Mundra, deputy governor of RBI, at an investor conference organised by Axis Capital on November 13, had said: “Many of the banks have been crowding in the retail space, trying to capitalise on demand for housing, two-wheelers and four-wheelers, white goods and so on. This, however, raises concerns on credit absorption level in the sector.” “Going forward, the banks would need to put in place systems and processes to ensure adequate origination and monitoring standards and stand guard against formation of asset bubbles,” Mundra said. According to latest data, retail loans grew by 13 per cent year-on-year till September 16, compared with 8.7 per cent growth in overall credit. During the corresponding period of the previous year, growth in retail credit stood at 17.9 per cent. http://www.business-standard.com/article/finance/guard-against-retail-asset-bubble-rbi-to-banks-114112000018_1.html
RUPEE HITS 8-MONTH LOW ON OIL FIRMS’ DOLLAR DEMAND
Mumbai: The rupee hit an eight-month low on Wednesday, as global gains in the dollar ahead of the release of US Federal Reserve minutes later in the day and slumping crude prices spurred oil firms to accelerate their greenback purchases. According to currency dealers, nationalised banks resorted to heavy dollar buying to meet the demand of the oil marketing companies (OMCs). The rupee ended at 61.96 compared with the previous close of 61.75. During intra-day trades, the rupee also touched a low of 61.99. Currency dealers believe it might touch 62 a dollar on Thursday. The rupee had ended at 62.04 on March 3. http://www.business-standard.com/article/reuters/rupee-hits-8-1-2-month-low-on-dollar-demand-from-oil-firms-114111900889_1.html
FORMER IMF ECONOMIST PRACHI MISHRA JOINS RBI
Mumbai: International Monetary Fund economist Prachi Mishra has joined the Reserve Bank of India (RBI). This is the first lateral entry in the central bank in the promotion grade. Mishra, who joins as chief general manager, will be part of the economic and policy research department. Michael D Patra is the executive director of the department, which is headed by Deputy Governor Urjit Patel. Her key role will be to strengthen the economic and policy research of the central bank. Mishra, who joined earlier this week, has already spoken to the researchers to get a sense of the kind of work that is done and identifying gaps. Researches in RBI said their job is more often that of information management than actual research. Mishra’s research interests include international economics, macroeconomics, development economics and political economy. Mishra was the senior economist at the IMF’s monetary and capital market department. Later, she worked with then chief economic advisor of the finance ministry and now RBI Governor Raghuram Rajan in North Block between November 2012 and September 2013. http://www.business-standard.com/article/finance/former-imf-economist-prachi-mishra-joins-rbi-114112000017_1.html
RECTIFY FLAWS IN HIRING OF BANK CLERKS: UNION TO GOVT
Kochi: The All-India Bank Employees Association has urged the Centre to streamline the recruitment of clerks to public sector banks. In a letter to the Financial Services Secretary, the association pointed out that the current recruitment, through the Institute of Banking Personnel Selection, was flawed and discriminated against job seekers from poor and backward backgrounds. The association said the conditions set for this year’s round of selection for five associate banks of the State Bank were retrograde. One condition was that a job seeker can apply for a clerical post in just one associate bank and that too in just one State. “When the recruitment is common for all the five subsidiary banks of SBI, why a candidate should not apply for vacancies in multiple banks in other States too?” the association wanted to know. It noted that all the five banks have vacancies in Karnataka, but a candidate can apply for only one bank. The association wondered why the vacancies couldn’t be pooled State-wise in a common recruitment and the choice of bank be left to the candidate at the time of the final selection. The association also pointed out that the examination fee of Rs. 600 charged by IBPS was exorbitant. The current procedure also worked against candidates in the reserved categories who were denied the chance to compete for other vacancies in other banks. The association has called for overhauling the recruitment norms and process. The best way to address these issues, according to the association, was to revive the old Banking Service Recruitment Boards. http://www.thehindubusinessline.com/todays-paper/tp-money-banking/rectify-flaws-in-hiring-of-bank-clerks-union-to-govt/article6616241.ece
TO AVOID RUSH, RBI ASKS FIRMS TO REMIT TAXES EARLY
Mumbai: The RBI has requested companies to pay income-tax in advance using online or alternative channels of banking to avoid last minute rush towards end-December. “The Reserve Bank of India has appealed to income-tax assessees to remit their income-tax dues sufficiently in advance of the due date. It has also stated that assessees can use alternate channels like select branches of agency banks or the facility of online payment of taxes offered by these banks. These will obviate the inconvenience involved in standing in long queues at the Reserve Bank offices,” a statement from the central bank said. Income-tax can be paid through 29 agency banks authorised by the banking regulator. These banks include most public sector banks — State Bank of India, Punjab National Bank, Bank of Baroda, Bank of India and Canara Bank, among others. http://www.thehindubusinessline.com/todays-paper/tp-money-banking/to-avoid-rush-rbi-asks-firms-to-remit-taxes-early/article6616243.ece
BANKS SEEK FEE FOR COOKING GAS SUBSIDY
New Delhi: State-owned banks are seeking a fee for crediting the cooking gas subsidy in the accounts of beneficiaries as the government gears up for a nationwide launch of cash transfers. The banks argue since the scale of credits is unforeseen, they will have to bear an unknown cost of servicing these accounts. Some banks are seeking a two per cent commission on credit for the Rs 568 subsidy a cylinder. The finance ministry, however, says once the cooking gas subsidy starts flowing into accounts, banks will have enough floating capital to meet their costs. “Discussions are on between the department of expenditure and the department of financial services,” said a senior official with knowledge of the talks between the two sections in the finance ministry. http://www.business-standard.com/article/economy-policy/banks-seek-fee-for-cooking-gas-subsidy-114112000020_1.html
JAN DHAN SCHEME RAISES CONCERNS OVER MONEY-LAUNDERING
New Delhi: “When there is flab in the system, the probability of fraud goes up tremendously,” said an official with a public sector bank. He was referring to the after-effects of the Jan Dhan Yojana, which met with all-round jubilation on completing its target of opening a record 75.16 million bank accounts on Tuesday, much before its stated deadline of January 26, 2015. The main reason why banks were able to open so many accounts in so little time was the relaxation in the Know Your Customer (KYC) guidelines. But this is now becoming a cause of concern for bankers, as a sudden flood of accounts at the bottom of the pyramid – the segment of society, more susceptible to fraud and easily be lured into parting with card details – can become a target of financial malfeasance and money laundering. “There is a possibility of the involvement of a money mule, a person using an account in somebody else’s name to do legal or illegal transactions. There are already reports of accounts being sold for a paltry Rs 500-Rs 1,000,” said a government official. http://www.business-standard.com/article/finance/why-jan-dhan-scheme-is-keeping-bankers-worried-114111901567_1.html
EXIM BANK TO SET UP Rs. 1,500-CR FUND TO ASSIST SHIP-BUILDING INDUSTRY
Jodhpur: To give a boost to ship building in the country, the Export-Import Bank of India (Exim Bank) is planning to set up a dedicated Rs. 1,500-crore fund with Government support. This proposal comes in the backdrop of the slump in global demand for ships and boats in 2012 and 2013 and foreign vessels accounting for a lion’s share (almost 90 per cent) in overseas cargo traffic handled at Indian ports. According to an Exim Bank study, the development of a successful ship building sector has been pivotal to the rapid and robust economic development in most countries in the world with long coastal boundaries. Ship building industry has the potential to significantly contribute to national GDP. The ship building sector has an immense direct and indirect positive impact on most other manufacturing and ancillary industries, besides its huge dependence on infrastructure and services sectors in an economy, the study said. “This fund (proposed) is for financing the construction, refitting and repair of ships in India,” said Yaduvendra Mathur, Chairman and Managing Director, Exim Bank, on the sidelines of the 20{+t}{+h}annual meeting of Asian Exim Banks Forum held recently. Mathur pointed out that the Shipping Ministry was toying with the idea of setting up a shipping finance company and sought Exim Bank’s feedback in this regard. http://www.thehindubusinessline.com/todays-paper/tp-money-banking/exim-bank-to-set-up-rs-1500cr-fund-to-assist-shipbuilding-industry/article6616245.ece
SBI LEADS CHARGE AS PSBS SEE HEIGHTENED BUYING INTEREST
Mumbai: Better-than-expected quarterly numbers of SBI have sparked buying interest in public sector banks. While the SBI scrip hit a near four-year high on Monday, Bank of Baroda touched a new record high and Canara Bank and Andhra Bank also rallied the most in four months. For the year so far, the top three PSBs — SBI, PNB and BoB — have emerged as the best-performing banking stocks, with gains ranging anywhere between 56% and 67%. Not surprisingly, these stocks have pared the discount with which they are trading to their long-term average valuations. Both, SBI and BoB currently change hands at a trailing 12-month price to book value of 1.5 and 1.2, very close to the historical average P/BV ratios. While PNB has also recorded YTD gains of 56%, it maintains a significant discount to its historical valuations, given that the bank is still struggling with asset quality concerns. Recently, BofA ML cited SBI among the contrarian trades based on the ownership trends, pointing out the fact that FII ownership in the stock, unlike some of the larger private sector banks, is significantly below the previous cyclical peaks. http://www.financialexpress.com/article/industry/banking-finance/sbi-leads-charge-as-psbs-see-heightened-buying-interest/
AXIS BANK LAUNCHES SELF-SERVICE TERMINAL FOR CASH DEPOSIT & WITHDRAWAL
Mumbai: Axis Bank-country’s third largest private sector bank-has launched a self-service terminal that enables customers to deposit as well as withdraw cash from the same machine. Customers can initiate a deposit transaction through these terminals even without using a debit card. If the customers PAN details are available with the bank then there is no restriction on the amount of cash being deposited, the bank said. Apart from providing convenience to the customer, this will also help the bank in reducing operational cost. This is because the terminal will reduce the frequency of loading cash in the machine as well as the cost of idle cash as it will allow cash recycling operations. This in turn will improve efficiency of the bank’s cash operations, it added. http://www.business-standard.com/article/finance/axis-bank-launches-self-service-terminal-for-cashdeposit-withdrawal-114111901288_1.html
EASE NORMS TO BRING IN MORE DOMESTIC CAPITAL INTO VC AND PE
Liberalising the norms to allow more domestic capital from pension funds could increase fund flow into the private equity (PE) and venture capital (VC) sector, says a report by IIT Madras. In the US, nearly 70 per cent of PE and VC commitment are from pension funds, foundations and university endowments, while these categories accounted for just eight per cent of the commitments in India, the report – The Fuel for Wealth Creation – noted, which focuses on limited partners (LPs) and VC and PE firms which are general partners (GPs). “The comparison of commitments made in India and the US indicate that governments, banks, and financial institutions account for more than 90 per cent of the commitment in India, whereas in the US, the same categories account for only 30 per cent,” said Thillai Rajan of IIT-Madras. Being long-term sources of funding with defined cash inflows and outflows, pension funds can be ideal sources for VC/PE funds. http://www.business-standard.com/article/finance/ease-norms-to-bring-in-more-domestic-capital-into-vc-and-pe-114112000005_1.html
IN MUTUAL INTEREST
Rahul Shah, a Mumbai-based financial services professional, began investing in mutual funds three years ago, shortly after he joined a global consultancy firm. If the Securities and Exchange Board of India (Sebi) had not banned entry loads by then, he would have been poorer by over Rs 3,000 today. An investment of Rs 1 lakh would have fetched him Rs 1.59 lakh today, with the Sensex rallying from 17,000 levels in 2011 to over 27,000 now. But an entry load of two per cent would mean that his initial investment would be worth Rs 98,000. The money lost to commissions, and the lower gains because he started with a lesser capital, would have reduced the end-value of his investment to Rs 1.56 lakh at the end of three years. The annual savings of Rahul and others like him add up to Rs 1,300 crore, according to former Sebi officials. While the figure may appear insignificant, it would actually rise sharply as, over the years, Rahul or any other investor would typically be stepping up their investments, leading to savings running into a few lakh rupees. http://www.business-standard.com/article/markets/in-mutual-interest-114111901396_1.html
SEBI TIGHTENS THE SCREWS ON INSIDERS, LISTING AGREEMENT VIOLATIONS
Taking a cue from the new investor-friendly Companies Act, SEBI has been engaged in a review and overhaul of many of its own regulations dealing with corporate governance and investor protection in recent months. Its Board meeting on Wednesday made changes to three critical regulations affecting investors – preventing insider trading, enforcing the listing agreement and firms seeking delisting. Of the three changes, the one that is likely to have the most wide-ranging impact on investors is the decision to convert SEBI’s listing agreement with companies into a full-fledged regulation, which would have greater legal enforceability. Though the Indian bourses feature the largest universe of listed companies in the world, a good number of these companies routinely default on making even basic disclosures to investors – on their quarterly results, balance sheets and shareholding patterns. Not only are the bourses usually ineffective in curbing such defaults, such slippages eventually lead to unscrupulous promoters vanishing with investors’ money. Well over a 1,000 listed firms are on the vanishing companies list on the bourses. Yet SEBI has found it difficult to impose stringent penalties on such firms because the listing rules were mainly in the nature of a ‘contract’ between the company and the exchange, lacking a strong legal backing. SEBI’s regulations preventing company insiders from trading on unpublished price-sensitive information are already far stricter than those in developed markets such as the US. http://www.thehindubusinessline.com/todays-paper/tp-markets/sebi-tightens-the-screws-on-insiders-listing-agreement-violations/article6616270.ece
SEBI MAKES IT EASY TO SETTLE MINOR VIOLATIONS
Chennai: From now on, persons or entities accused of minor violations would be allowed to settle enforcement proceedings against them even before they are served formal show cause notices by the market regulator. The move would help save on cost and time, said market regulator. SEBI will send intimation to the entity under scrutiny in case of minor violations, before issuing a formal enforcement show cause notice. The initial notice will enable the entity to settle the administrative and civil proceedings through the consent mechanism. Currently, settlement of proceedings commences after the issue of show cause notice. According to SEBI, the practise of providing the first opportunity to settle administrative and civil proceedings only post the show cause notice stage results in delay in conclusion of proceedings and resultant wastage of resources. “SEBI, has, therefore decided that in minor violations intimations will be sent about impending enforcement action to the concerned parties upon arrival of the said actions by the competent authority and before a show cause notice is issued,” the regulator said. “This would enable parties to seek settlement of proceedings or make voluntary submissions even prior to receipt of a detailed show cause notice. http://www.thehindubusinessline.com/todays-paper/tp-markets/sebi-makes-it-easy-to-settle-minor-violations/article6616271.ece
