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FRDI Bill’s bail-in clause worries labour ministry Officials say move may impact medical benefits under ESIC The Union labour and employment ministry has raised concerns about the ‘bail-in’ clause — under which bank deposits can be used for helping failing public sector banks (PSBs) to stay afloat — in the Financial Resolution and Deposit Insurance (FRDI) Bill.This is perhaps the first time the clause has drawn flak from within the government, which is facing criticism from other quarters as well. The ministry has represented that a substantial chunk of money kept in fixed deposits of PSBs for providing medical benefits under the Employees’ State Insurance (ESI) scheme to around 30 million employees will be rendered unsafe due to this clause.Union Finance Minister Arun Jaitley had in August last year introduced in the Lok Sabha the FRDI Bill, which proposes a comprehensive resolution framework to ensure that in the case of financial institutions, including banks and insurance c...

Govt may bring more amendments in insolvency law The insolvency law might be amended depending on recommendations of the panel reviewing issues related to the legislation, including those pertaining to home buyers, a senior government official said. While everything is timebound under the Insolvency and Bankruptcy Code (IBC), Corporate Affairs Secretary Injeti Srinivas said the issue is how the interests of stakeholders are to be balanced. A 14-member panel, also chaired by Srinivas, is working to identify and suggest ways to address issues faced in the implementation of the IBC — which came into force in December 2016. The Business Standard, New Delhi, 29th January 2018

Resolution plans under IBC may need approval of fewer lenders. The government is debating whether to lower the approval threshold for resolution plans under the Insolvency and Bankruptcy Code (IBC) in a move aimed at preventing too many insolvent companies from going into liquidation.More than 75% of creditors currently have to agree to a resolution plan, implying that just over 26% can reject it and force a company into liquidation. The government feels liquidation should be the last resort and is considering whether such plans can be approved by a two-thirds majority or even a simple majority."There is a need to relook at the current majority requirement. Just 26% members cannot take a company to liquidation," said a senior government official, who didn't want to be named. "We are seeing it as an issue." Many companies that have gone into liquidation could have continued to function under a less rigorous regime, some in the government feel.According to...

Finance ministry decides not to recreate an omnibus development bank The word from North Block just before the Budget is that the finance ministry has decided not to recreate an omnibus development bank. Instead with at least one international rating agency having pushed up India’s credit rating, it will push state-owned and supported entities to take advantage of the favourable conditions to raise more money from the market For this purpose, the ministry has cleared a proposal from at least one line ministry to create a specialised financing arm quite like the Indian Railway Finance Corporation. When state-owned institutions raise money from the markets on their own steam to finance their capital needs, those qualify as off-Budget borrowings. Prime Minister Narendra Modi and Finance Minister Arun Jaitley are convinced that even for financing the needs of the soft infrastructure sectors, the same strategy could be applied. This would keep the government borrowing within prudent...

NSE to finalise list of commodity derivatives soon As it awaits Sebi guidelines on universal exchanges, NSE has said it will finalise its list of commodity derivatives products to launch on its platform in next 1-2 months. The leading bourse also said it has made the required technological changes for such trades. The National Stock Exchange (NSE), which is looking to offer trade in commodity derivatives such as energy and metals, is currently engaging brokers and other market participants for shortlisting such products with an aim to bring in a diversification in the segment. On December 28 last year, the markets watchdog Securities and Exchange Board of India (Sebi) had announced that from October 2018, the country will have a unified exchange regime wherein stock exchanges will be allowed to offer trading in commodities derivatives. Detailed guidelines are awaited. "Our technology platform is ready for commodity derivative trading. Whatever technological changes were ...