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Sebi eases norms for FPIs, startups; allows MFs to segregate distressed assets

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Mumbai: In a series of reforms, capital markets regulator Sebi eased norms for startup listings and allowed mutual funds to segregate distressed assets to safeguard investment returns.

At a meeting held here, the Sebi board also approved a proposal to expand the offer-for-sale mechanism for reduction of stake in listed companies and relaxed clubbing of investment limit norms for well-regulated foreign investors.

Besides, it cleared a proposal to allow custodial services in the commodity derivatives market to enable institutional participation.

 

With regard to listing of startups, the regulator has relaxed norms for new-age ventures in sectors like e-commerce, data analytics and biotechnology to raise funds and get their shares traded on stock exchanges.

Other measures included renaming the ‘Institutional Trading Platform’ that the regulator had created for such listings as ‘Innovators Growth Platform’.
The relaxation in norms follows tepid market response to the existing platform and demands from various stakeholders to make the rules easier and the platform more accessible in the wake of expanding activities in the Indian startup space.

“It (Institutional Trading Platform) has not taken off since 2015, we are aware of that, Sebi tried reviving it in 2016 also. But that time it couldn’t be done.

“Now this time since June-July we had a detailed discussion with the tech companies from Bangalore… We have tried to build in various features and we hope that it will be used for listing and also exit of funds which are in startups,” Sebi Chairman Ajay Tyagi told reporters here after the board meeting.

In another big move, the regulator has decided to allow mutual funds to create segregated portfolios with respect to debt and money market instruments in case of credit events while ensuring fair treatment to all unit holders.

Creation of segregated portfolios is a mechanism to separate distressed, illiquid and hard-to-value assets from other more liquid assets in a portfolio. It prevents the distressed assets from damaging the returns generated from more liquid and better-performing assets.

“We will see that this scheme is not misused,” Tyagi said.

The regulator also relaxed its norms for clubbing of investment limits for well-regulated foreign portfolio investors (FPIs).

As per Sebi, multiple entities having common ownership, directly or indirectly, of more than 50 percent would be treated as part of the same investor group and their investment limits would be clubbed.

However, clubbing of investment limits would not be applicable in case of entities having common control if the FPIs are appropriately regulated public retail funds.

The OFS norms will be eased to allow this mechanism for all companies with market cap of Rs 1,000 crore and above, as against the current limit of top 200 companies.

Also, if the seller fails to get sufficient demand from non-retail investors at or above the floor price on the first day of offer, then the seller may choose to cancel the officer post bidding in full (both retail and non-retail) on the first day itself and not proceed with the offer to retail investors on the second day.

Besides, the regulator said that an earlier proposed exercise for determining a uniform bond valuation methodology to be followed by all regulated entities across the financial sector would not be pursued.

Such an exercise was suggested by a working group on development of corporate bond market in India, chaired by H R Khan.

However, Sebi will prescribe high-level principles to be followed uniformly across all mutual funds for strengthening the existing system of valuation of corporate bonds for mutual funds.

Regarding the pricing agencies, the regulator has decided to evolve a supervisory and regulatory framework.

Also, housing finance companies and systemically important NBFCs may be exempted from disclosure of increase or decrease in shareholding due to encumbrance or release of the encumbrance of shares. A similar exemption already available to scheduled commercial banks and public financial institutions.


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Business

RBI needs to ensure stability: Shaktikanta Das

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New Delhi: The head of the Reserve Bank of India (RBI) said he would take the steps necessary to maintain financial stability in the country and help create favourable conditions for growth.

India’s economy has grown because of measures such as the nationwide goods and services tax and the insolvency and bankruptcy code that prevents wilful defaulters from bidding for stressed assets, Shaktikanta Das said in his address to an investor roundtable.

The country’s growth story is backed by its strong domestic fundamentals, he said, citing lower inflation.

 

Annual retail inflation rate dropped to an 18-month low of 2.19 per cent in December, strengthening the views of some economists that the central bank could ease monetary policy next month.

India’s top business groups on Thursday urged the central bank to cut its benchmark interest rate by at least half a percentage point and lower the cash reserve ratio it imposes on banks.

The country also needs to watch out for any sudden turbulence in the gloal financial market, Das said.

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Centre removes two PNB executive directors for lapses in Rs 13,500-cr fraud

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Chennai:The Central government has removed two Punjab National Bank (PNB) Executive Directors — Sanjiv Sharan and K.Veera Brahmaji Rao — for the lapses in the Rs 13,500 crore fraud allegedly perpetrated by absconding diamantaire Nirav Modi.

The PNB has intimated the action to the stock exchanges.

“We welcome the Central government’s action to dismiss the two Executive Directors. The scam of such proportions could not have happened without the knowledge of the top management,” C.H. Venkatachalam, General Secretary, All India Bank Employees’ Association (AIBEA), told IANS.

 

“Perhaps for the first time, the Centra has removed the Executive Directors of a nationalised bank under the Nationalised Banks (Management and Miscellaneous Provision) Scheme, 1970. All these days it was said the top management of government-owned banks — Chairman, Managing Director, Executive Directors — are governed only by the contract of appointment.

“It is also good that the central government has followed the due process of giving the two PNB Executive Directors opportunity to put forth their views before dismissing them,” Venkatachalam added.

According to the Central government’s notification, on July 3, 2018, Sharan and Rao were issued a show cause notice as to why they could not be removed from office for having failed to exercise proper control over the functioning of PNB, thus enabling the fraud through the misuse of SWIFT at the bank’s Brady House branch in Mumbai.

After considering Sharan and Rao’s replies and the comments of the bank’s Board, the Centre removed them from office as it found it was expedient in the interests of PNB.

According to the notification, the dismissal of Rao is subject to the outcome of a plea in the Delhi High Court.

“We are happy to see some action being taken. Whether it is only the two Executive Directors and other officials are also involved in the scam has to be probed in full,” Venkatachalam said.

According to him, in the past, low-level officers would have been the scapegoats for such massive scams.

“With the action taken on the top management, people will be satisfied that public sector bank officials are answerable for their lapses,” Venkatachalam added.

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In this new world, data is the new wealth: Ambani

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Mumbai: Reliance Industries chairman and managing director Mukesh Ambani urged Prime Minister Narendra Modi to take steps against ‘data colonisation’, specially by global corporations, stating that Indian data must be owned by Indians.

Invoking Mahatma Gandhi’s movement against political colonisation, Ambani said India now needs a new movement against data colonisation.

“Gandhiji led India’s movement against political colonisation. Today, we have to collectively launch a new movement against data colonisation,” he said Gandhinagar at the Vibrant Gujarat Global Summit.

 

Stressing that, in this new world, data is the new wealth, Ambani said, “India’s data must be controlled and owned by Indian people and not by corporate, especially global corporations.”

He further said, “For India to succeed in this data driven revolution, we will have to migrate the control and ownership of Indian data back to India. In other words, give Indian wealth back to every Indian.”

Stating that the “entire world has come to recognise” Modi “as a man of action”, Ambani said, “Honorable Prime Minister, am sure you will make this one of the principal goals of your digital India mission.”

Later in the day, countering Ambani’s call, Governor – Commonwealth of Kentucky, Matthew Griswold, asked Modi “to think in the opposite” in order to realise the tremendous opportunity that lies in Indo-US partnership.

“Honorable prime minister you have been asked from this stage to think about limiting the amount of competition, limiting the exchange of ideas, information and goods. I would encourage you to think in the opposite,” he said.

While stating that it is important to put the people of India first, Griswold said, “It is also important to put their opportunity and our opportunity as citizens of the world to trade with one another and exchange ideas because iron sharpens iron.”

The greatest possibility comes from the exchange of these idea, he added.

“If we can cut the regulations, cut the bureaucracy, cut the red tape, the opportunity is enormous between our nations,” he added that India is now the 10th largest trading partner for the US and “climbing quickly”.

“The opportunity before us between India and the United States is incredible, but responsibility falls on each of one us, those of us in elected positions, those of you in the industry, those of you who represent various constituencies, we have much work to do…we must do this, ” Griswold said.

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