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RBI order may bump up ARCs valuations

RBI order may bump up ARCs valuations The Reserve Bank of India’s (RBI’s) dispensation to allow asset reconstruction companies (ARCs) to hold more than 26 per cent stake in distressed assets might bump up the valuations of the ARCs for foreign investors The rule puts ARCs in a commanding position in deciding how an asset resolution should happen, something they could not do so far because of their limited shareholding. Technically, the latest rules give ARCs freedom to become owners of the stressed firm and drive the resolution process “We will now have better level of control and more say in how the company concerned should be operated,” said Vinayak Bahuguna, managing director and chief executive officer of Asset Reconstruction Co of India (ARCIL). “Moreover, it gives ARCs the ability to maximise returns by increasing shareholding and selling the stake off in case a company turns around.” The central bank, in a notification on its website on Thursday, did not specify an upper limit that…
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Govt fixes sovereign gold bond rate at Rs 2,961/g

Govt fixes sovereign gold bond rate at Rs 2,961/g The price of new series of sovereign gold bonds (SGBs) opening on Monday has been fixed at Rs 2,961 per gram, the Reserve Bank of India said on Friday.The government, in consultation with the Reserve Bank of India, has decided to offeradiscount of Rs 50 per gram to investors applying online and making payments digitally.“For the subscription period from November 27, 2017, to November 29, 2017,the nominal value of the bond based on the simple average closing price for gold of 999 purity of the last three business days of the week preceding the subscription period (November 22 to 24) works out to Rs 2,961,” the RBI said in a statement. The Business Standard, New Delhi, 25th November 2017

Aadhaar can reduce bank fraud

Aadhaar can reduce bank fraud There has been Rs 3 billion loss in the past year due to fraud in the banking sector and the linking of bank accounts with Aadhaar can drastically reduce such frauds, said A.B. Pandey, chief executive officer of Unique Identification Authority of India ( UIDAI) on Friday, while speaking at the fifth Global Conference on Cyber Space (GCCS) in the national capital. The Business Standard, New Delhi, 25th November 2017

Promoters loss is PEs gain

Promoters  loss is PEs  gain Private equity (PE) players are getting ready to bid for stressed assets, which they expect to bag at attractive valuations after an ordinance amended the Insolvency and Bankruptcy Code (IBC). The ordinance has practically barred most promoters of the defaulting companies from bidding for their assets in the bankruptcy auction.

PE players have raised distressed assets funds totalling over Rs 4 billion in the past two years, sensing an opportunity in the increasing number of bad assets in the banking system.

These include a Rs 1.04 billion fund raised by Brook field and SBI in July 2016 anda Rs 1 billion fund raised by Piramal Group and Bain Capital in August 2016.

The change in the IBC comes at a time when 11 of the 12 cases mandated by the Reserve Bank of India (RBI) for early bankruptcy proceedings are in an advanced stage of auctioning assets.

"One can expect that prices that would be realised through these auctions may be on the lower side now," s…

RBI relaxes equity holding norm for asset reconstruction companies

RBI relaxes equity holding norm for asset reconstruction companies Move to encourage foreign funds scouting for bad assets to tie up more with domestically incorporated ARC The Reserve Bank of India (RBI) on Thursday allowed asset reconstruction companies (ARCs) with a minimum net owned fund of Rs 100 crore to convert debt into equity worth more than 26 per cent. This gives ARCs greater control in a distressed asset and would encourage foreign funds scouting for bad assets to tie up even more with domestically incorporated ARCs, said an executive with an asset reconstruction company.ARCs typically convert their acquired debt into equity in case they find the company can be nursed back to health. The central bank had so far put a cap of 26 per cent of equity holding in such companies. The RBI also put additional conditions on such ARCs, such as at least half of the board of the directors of such firms should be independent, and any policy on debt to equity conversion should be drawn in app…

High GST may hit Make-in-India electronics goal

High GST may hit Make-in-India electronics goal Prime Minister Modi’s flagship Make In India plan could be hurt by the GST rates that have been set for electronics as some rates make it cheaper to import goods, industry players have said, possibly putting a damper on the government’s goal to achieve zero imports in electronics by 2020. The Manufacturers’ Association for Information Technology (MAIT), the apex body representing India’s IT hardware sectors and certain manufacturers, expressed concern over tax slabs under  GST regime related to printers, monitors and data cables. Speaking to ET, Anwar Shirpurwala, Executive Director, MAIT said that although GST has reduced the number of taxes, the rates in some cases make it cheaper for importers than for smaller companies manufacturing in the country. For example, the pre-assembled desktops are charged at 18% but standalone monitors that are mostly manufactured in the country are charged at 28%. “All IT products should be in one slab. Desk…

Defaulting promoters set to lose their companies

Defaulting promoters set to lose their companies Wilful defaulters and borrowers with NPAs for a year or more cannot bid NOT ELIGIBLE FOR BIDDING An ordinance amending the and Bankruptcy Code (IBC) barred promoters of undergoing the resolution process for their own companies when auctioned as part of bankruptcy proceedings.Besides, sister concerns and corporate will also not be eligible to these companies. The ordinance, promulgated Thursday, added Section 29A to “Aperson shall not be eligible to resolution plan if such person, or person acting jointly with such any person who isapromoter or control of such person, insolvent.” This prohibits promoters or sister of companies with non performing more than a year from bidding for these companies In order to bid, promoters will have to make the NPAs standard assets by paying the principal and interest.However, even this is not allowed once the National Company Law Tribunal (NCLT) has accepted an insolvency petition. None of the promoters or th…