Skip to main content

Sebi may ease FPI norms, compliance rules for firms facing bankruptcy

By
Sebi may ease FPI norms, compliance rules for firms facing bankruptcy
At least 400 companies are undergoing resolution under insolvency and bankruptcy code, FPIs account for 18% of India’s market capitalization
The Securities and Exchange Board of India (Sebi) board is likely to further ease norms for foreign portfolio investors (FPIs) and come out with easier compliance rules for companies undergoing bankruptcy, said two people with direct knowledge. The board is scheduled to meet on 28 December
The board will expand the list of eligible jurisdictions to grant registration to FPIs, rationalize “fit and proper” criteria and simplify regulatory requirements, these people said.
The move is aimed at easing direct registration for FPIs and avoiding so-called participatory notes (P-notes), said one of the people cited earlier. On 28 June, the regulator had issued a discussion paper to ease FPI entry.
FPIs had holdings worth Rs 418.81 billion in Indian stocks at the end of 30th September. That accounted for 18% of India’s $2.3 trillion market capitalization.
The regulator also plans to ease the so-called broad-based criteria for category-II FPIs to include sovereign wealth funds, insurance/reinsurance companies, pension funds and exchange-traded funds (ETFs) as their underlying investors, said one of the two people cited earlier.
As per Sebi norms, a Category II fund should have at least 20 investors to qualify as broad-based; a pre-requisite for grant of a licence is that such overseas investors should have a bank as an underlying investor. Category II FPIs include banks, asset management companies and investment managers.An email sent to Sebi was not answered immediately.
“The proposed changes will help in facilitating more FPI set-ups and as a result, further cut down the already diminishing P-note issuance. Second, it will ease out certain practical difficulties which FPIs face on a day-to-day basis,” said Tejesh Chitlangi, a partner at law firm IC Universal Legal.
In addition, the Sebi board will also finalize compliance norms for insolvent companies based on recommendations of a committee comprising members from Sebi and the Insolvency and Bankruptcy Board of India (IBBI). This has mainly to do with listing regulations.
For instance, “the minimum public shareholding requirement (MPS) of 25% would be eased or removed for these insolvent listed companies. During the restructuring or resolution process, it’s possible that their public float would go below the required 25%,” said the second of the two people cited earlier.
“The IRP (insolvency resolution professional) of these companies will receive alerts and assistance from exchanges to adhere to LODR (listing obligation and disclosure requirements),” said the second person.
This is the second time this year that the market regulator is considering changes in regulations to ease the resolution of stressed assets in banks’ balance sheets
On 21 June, the Sebi board had exempted buyers of shares in distressed firms from the requirement of making an open offer even if the purchase triggers such an event under the takeover code.At least 400 companies are undergoing resolution under the insolvency and bankruptcy code.
The Mint, New Delhi, 20th December 2017

Comments

Post a Comment

Popular posts from this blog

RBI deputy governor cautions fintech platform lenders on privacy concerns during loan recovery

By
  India's digital lending infrastructure has made the loan sanctioning system online. Yet, loan recovery still needs a “feet on the street” approach, Swaminathan J, deputy governor of the Reserve Bank of India, said at a media event on Tuesday, September 2, according to news agency ANI.According to the ANI report, the deputy governor flagged that fintech operators in the digital lending segment are giving out loans to customers with poor credit profiles and later using aggressive recovery tactics.“While loan sanctioning and disbursement have become increasingly digital, effective collection and recovery still require a 'feet on the street' and empathetic approach. Many fintech platforms operate on a business model that involves extending small-value loans to customers often with poor credit profiles,” Swaminathan J said.   Fintech platforms' business models The central bank deputy governor highlighted that many fintech platforms' business models involve providing sm
Post a Comment
Read more

Credit card spending growth declines on RBI gaze, stress build-up

By
  Credit card spends have further slowed down to 16.6 per cent in the current financial year (FY25), following the Reserve Bank of India’s tightening of unsecured lending norms and rising delinquencies, and increased stress in the portfolio.Typically, during the festival season (September–December), credit card spends peak as several credit card-issuing banks offer discounts and cashbacks on e-commerce and other platforms. This is a reversal of trend in the past three financial years stretching to FY21 due to RBI’s restrictions.In the previous financial year (FY24), credit card spends rose by 27.8 per cent, but were low compared to FY23 which surged by 47.5 per cent. In FY22, the spending increased 54.1 per cent, according to data compiled by Macquarie Research.ICICI Bank recorded 4.4 per cent gross credit losses in its FY24 credit card portfolio as against 3.2 per cent year-on-year. SBI Cards’ credit losses in the segment stood at 7.4 per cent in FY24 and 6.2 per cent in FY23, the rep
Post a Comment
Read more

India can't rely on wealthy to drive growth: Ex-RBI Dy Guv Viral Acharya

By
  India can’t rely on wealthy individuals to drive growth and expect the overall economy to improve, Viral Acharya, former deputy governor of the Reserve Bank of India (RBI) said on Monday.Acharya, who is the C V Starr Professor of Economics in the Department of Finance at New York University’s Stern School of Business (NYU-Stern), said after the Covid-19 pandemic, rural consumption and investments have weakened.We can’t be pumping our growth through the rich and expect that the economy as a whole will do better,” he said while speaking at an event organised by Elara Capital here.f there has to be a trickle-down, it should have actually happened by now,” Acharya said, adding that when the rich keep getting wealthier and wealthier, they have a savings problem.   “The bank account keeps getting bigger, hence they look for financial assets to invest in. India is closed, so our money can't go outside India that easily. So, it has to chase the limited financial assets in the country and
Post a Comment
Read more