Skip to main content

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 approval of the board, while delegating “powers to a committee comprising majority of independent directors for taking decisions on proposals of debt to equity conversion”.
The shares acquired after conversion of debt should be marked to market at least once a month. In addition, “the ARC shall explore the possibility of preparing a panel of sector-specific management firms/ individuals having expertise in running firms/companies which could be considered for managing the companies,” the banking regulator said in its notification.
The Business Standard, New Delhi, 24th November 2017

Comments

Popular posts from this blog

At 18%, GST Rate to be Less Taxing for Most Goods

About 70% of all goods and some consumer durables likely to cost less

A number of goods such as cosmetics, shaving creams, shampoo, toothpaste, soap, plastics, paints and some consumer durables could become cheaper under the proposed goods and services tax (GST) regime as most items are likely to be subject to the rate of 18% rather than the higher one of 28%.

India is likely to rely on the effective tax rate currently applicable on a commodity to get a fix on the GST slab, said a government official, allowing most goods to make it to the lower bracket.

For instance, if an item comes within the 12% excise slab but the effective tax is 8% due to abatement, then the latter will be considered for GST fitment.

Going by this formulation, about 70% of all goods could fall in the 18% bracket.

The GST Council has finalised a four-tier tax structure of 5%, 12%, 18% and 28% but has left room for the highest slab to be pegged at 40%. A committee of officials will work out the fitment and the council…

Coffee-Toffee, the GST Debate Continues

Hundreds of crores of rupees in the form of taxes ride on the exact categorisation of products Is Parachute hair oil or edible oil? Is KitKat a chocolate or a biscuit? Is a Vicks tablet medicament or confectionery? For the taxpayer and the tax collector, this is much more than an exercise in semantics -hundreds of crores of rupees ride on the exact categorisation.
As the government moves closer to rolling out the goods and services tax (GST) on July 1, many such distinctions are being debated so that no ambiguity remains. Not just that, the government is revisiting old tax cases that were lost over product categorisation, according to people with knowledge of the matter, presumably with a view to making sure that revenue collections can be maximised. “In the past, several tax officers had challenged some of the product categorisations, including those in the retail segment, but lost out in court or at appellate level,“ said one of the persons. “Now we have a chance to go ahead with speci…

Deposit gush:-CA Institute Bats for Special Audit