Sebi boostforhousing finance firms
BS REPORTER
Mumbai, 6 October
In a respite for housing finance companies, the Securities and
Exchange Board of India (Sebi) has decided to relax the investment
limit for such entities in debt mutual funds. In its meeting today,
the Sebi board allowed debt mutual funds to take additional exposure
in housing finance firms over and above the 30 per cent cap for the
financial services sector.
"It has been decided that an additional exposure to the financial
services sector (over and above the existing 30 per cent) not
exceeding 10 per cent of the net assets of the scheme in debt-oriented
mutual fund schemes will be allowed by way of an increase in exposure
to HFCs (housing finance companies) only," the Sebi said in apress
release.
In a circular last month, the Sebi had directed mutual funds to ensure
the total exposure of their debt schemes in a particular sector did
not exceed 30 per cent of the net assets of the scheme.
RV Verma, chairman and managing director, National Housing Bank, said
the move would improve liquidity, temper interest rates and integrate
the housing finance sector better with capital markets.
The Sebi today said the relaxation would be subject to certain
conditions such as that the securities issued by HFCs were rated 'AA'
or above. This will qualify companies such as HDFC, LIC Housing
Finance, Religare, Dewan Housing and some others.
Also, the HFCs should have been registered with the National Housing
Bank (NHB). "However, the total investment in HFCs cannot exceed 30
per cent of the net assets of the scheme," the release said.
In other decisions, the Sebi has allowed foreign institutional
investors (FIIs) to re-invest 50 per cent of their previous year's
debt limit in the current year. This would be applicable from 2014.
Further, the utilisation period for government and corporate debt
limits for FIIs has been reduced to 30 days and 60 days, respectively,
from the earlier 90 days. This will result in greater flow of FII
money into the debt market.
Also, FIIs and their subaccounts can now utilise their corporate debt
limits for long-term infra bonds. For this, no prior Sebi approval
will be required, till the overall FII investment in the segment
reaches the 90 per cent limit. Once the 90 per cent ceiling was
reached, the auction mechanism would be initiated for allocation of
the remaining limits, the Sebi said.
The regulator will prepare draft guidelines to rationalise and
harmonise different routes for foreign portfolio investments. This
will be based on the guidance of a working group on foreign investment
in India.
The Sebi said it had approved a proposal to amend the Sebi
(Depositories & Participants) Regulations to enable warehouse
receipts, fixed deposits with banks and corporates, insurance
policies, investment products of post offices, among other things, to
be held in demat form. "This will enable the investor to view the
details of his holdings and transactions across all asset classes
through a single consolidated statement," the Sebi said.
The regulator has also asked stock exchanges to issue an advisory that
every company is expected to have a minimum of 25 per cent public
shareholders in their companies. As a relief, it has said capital
issued outside India is neither included in the numerator nor in the
denominator.
"Stock exchanges shall carefully monitor and take steps to issue
advisories to shareholders of noncompliant companies about potential
penal actions, so that investors have adequate time to safeguard their
interests," the Sebi said.
To give a boost to capital-raising by loss-making listed entities, the
Sebi said it had reviewed the eligibility norms for IPOs. It has
clarified that listed entities coming out with follow-on public offers
(FPOs) need not meet the profitability criteria that companies coming
to primary market for the first time have to follow. Currently, any
company that wants to raise money through an IPO has to have a
consecutive three-year profit record.
Regulator allows debt mutual funds to have additional exposure; more
leeway for foreign institutional investors KEYDECISIONS
|Debt mutual funds allowed to invest in securities issued by HFCs
|FIIs allowed to re-invest 50% of previous year's debt holding from
2014 |Sebi to prepare draft for uniformguidelines for different types
of foreign investors |Demat of warehouse receipts, bank FDs, insurance
policies and post office investment products allowed |Sebi to resolve
issues regarding minimum shareholding norms |Listed entities coming
out with FPOs need not meet profitability criteria |Sebi to provide
powers to depositories to take action on issues
Sebi Chairman UK Sinha
Govt, RBI to expedite rules on newbanking licences
Chidambaram says banking Act will be amended to facilitate move
BS REPORTER Mumbai, 6 October
The government and the Reserve Bank of India (RBI) have geared up to
finalise the norms on new banking licences. In a meeting with the
banking regulator, Finance Minister P Chidambaram has assured that
necessary amendments would be made in the banking Act.
"We have discussed this with RBI, and the central bank has agreed to
take the process forward. I have assured RBI that we will do our best
to get the amendment Bill passed in the winter session of Parliament,"
said Chidambaram. The banking regulator had put out the draft norms on
new banking licences in August 2011. A year later, RBI released the
highlights of comments and feedback received on the draft norms.
Chidambaram said inflation was a concern and the real answer lied in
increasing the supply. The hike in diesel prices would lead to a spurt
in inflation in the immediate term, but it would cool down, going
forward, he said. Today the government told RBI what it intends to do
in future, the minister added.
After taking charge as the finance minister, this was Chidambaram's
first visit to the financial capital of the country. Apart from RBI
officials, he also met top officials of the Securities and Exchange
Board of India, the Association of Mutual Funds in India and the stock
exchanges.
Market players have urged the finance minister to take more measures
to address the financial challenges faced by the economy and ensure
that the country returns to high growth path. Chidambaram assured them
there would be more reforms.
On raising the foreign direct investment (FDI) limit in insurance,
Chidambaram said the decision was taken so that the Indian partners
were not burdened with additional capital infusion.
"Public sector banks that have promoted some insurance companies need
capital for their own capitalisation. How can they provide additional
capital for their joint venture insurance companies?" said
Chidambaram.
He said hiking FDI limit was the only way to raise capital for the
insurance industry.
On Shome report
Chidambaram said the Shome panel report would be made public in the
next few days. "I hope once we find the way forward, all pending
disputes as well as anticpated disputes can be resolved."
On disinvestment target
"I approach my task with a high degree of confidence. My approach
would be to meet the target," the minister said.
PChidambaram
More jobs for auditors
SUSHMI DEY
New Delhi, 5 October
The recent amendments made in the Companies Bill, cleared by the
Cabinet onn Thursday, is expected to create more jobs for auditors as
the government has decided to cap the number of companies an
individual auditor can take on as clients, at 20.
"The ceiling will help to create many more jobs for auditors and
promote economic democracy," says Pradeep S Mehta, secretary general,
CUTS International.
The move, though triggered through a recommendation made by the
Parliamentary Standing Committee on Finance, also gives a breather to
big audit firms as they can continue to have large number of clients.
The Standing Committee suggested limiting the number of clients
according to auditing firms and not auditors. However, amendments
cleared by the Cabinet run through the number of companies that can be
served by an individual auditor, whereas it does not talk about the
audit firm.
While foreign audit firms are not allowed to operate in India, experts
say most of the big auditing firms themselves offer consultancy
services for major corporates, while for auditing they function
through proxies. Hence, most of these big audit firms would benefit
from the relaxation in cap.
"It is possible that there are skeletons in the cupboard which may or
may not be seen by the auditors. So it is for good that such
appointments are not just approved by the board of directors but also
validated by shareholders," says Sushma Berlia, co-founder &
chancellor, Apeejay Stya University.
COMPANIES BILL Number of firms that an auditor can take on capped at 20
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CS A RENGARAJAN,, B.Com ,FCS, LLB, PGDBM
Company Secretary, Chennai
email csarengarajan@gmail.com
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