| RBI may allow 7- 8 new banks | ||
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Mumbai, 22 April The Reserve Bank of India ( RBI) is likely to give banking licences to seven- eight new entities, including aspirants among nonbanking financial companies, as well as industrial houses. The number of new licences to be issued, which would be much higher than what the prospective applicants had estimated, was arrived at after rounds of discussions with the government. In its discussion paper on the matter, released in August 2010, RBI had said a " few" licences would be given, leading the market to believe the number would be three or four. According to banking industry sources, the government, which is keen on financial inclusion through spreading formal modes of credit to all parts of the country, insisted that more new players be allowed. The process to allow new banks has come from RBI nearly a decade after two entities were allowed to set up banks in the previous round. The central bank had released the final norms on new bank licences in the last week of February and set July 1 as the deadline for filing of applications. Most major corporate houses, such as the Tata group, Birla group and Reliance Industries, besides non- banking financial companies like L& T Finance, M& M Financial Services and the Shriram group, are said to be interested in setting up new banks. RBI is also likely to issue clarifications to the aspirants on the ' fit and proper' criteria. In the final norms, RBI had said an entity would be considered fit to set up banks if it has a track record of sound credentials and integrity, and has been financially sound over the past 10 years. This had raised concern among some aspirants with cases pending with the Central Bureau of Investigation, Enforcement Directorate, Income Tax Department, etc, that they would be disqualified from applying. Some of these aspirants had sought clarification from the regulator, asking if such pending cases would indeed amount to disqualification. RBI is expected to clarify that such instances would not be a hindrance in applying for banking licences, provided all such cases are disclosed fully. The central bank is expected to make the clarifications public by the end of the month or early next month. The queries were asked to be sent by April 10 and RBI had said it would clarify without disclosing the identity of the entities seeking those clarifications. To clarify that aspirants with pending I- T, ED or CBI cases can also apply ALSO READ >Mar 8, 2013: RBI to clarify doubts on new bank licences http:// goo. gl/ 8xMD2 BANKING ON NEW PLAYERS A timeline of the process to allow new entities in the country's banking sector 1993 | First set of guidelines on new banking licences issued |Nine new entities allowed to set up banks 2001 |Revised guidelines issued |Two more banks opened subsequently Feb 2010 |Finance minister announces RBI would issue fresh licences Aug 2010 |Discussion paper of new bank licences released Aug 2011 |RBI releases draft norms Dec 2012 |Lok Sabha passes Banking Laws (Amendment) Bill |Move paves way for RBI to issue final guidelines Feb 2013 |Final norms on new bank licences issued July 1, 2013 |Deadline for filing applications for new banking licences | ||
| Co- op banks can't use Sarfaesi for debt recovery: Gujarat HC | ||
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Ahmedabad, 22 April The high court here has said cooperative banks cannot use the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act (Sarfaesi), 2002, for recovery of debts from its defaulters. A bench of Chief Justice Bhaskar Bhattacharya and J B Pardiwala, in a common judgement, today declared the central government notification dated January 28, 2003, bringing cooperative societies within the purview of the Act as null and void. They said this clashed with the Banking Regulation Act, 1949. The bench was acting on a bunch of petitions seeking cancellation of the said notification. Various petitioners ( defaulters) had approached the HC after cooperative banks sent them notices under the Act, warning against property seizure as they had defaulted on loan payments. The petitioners had argued Sarfaesi was not applicable to cooperative banks formed under state law, as there already was a mechanism for recovery under those legislations, in this case, the Gujarat Cooperative Societies Act, 1961. Also, the Act was applicable to " a company engaged in banking, and not a cooperative society engaged in banking", they had said in their petitions, adding there was a conscious exclusion and deliberate omission of cooperative banks from the purview of the Banking Regulation Act. The petitioners has also relied on observations of the Supreme Court in the case of Greater Bombay Cooperative Bank Limited v/ s United Yarn Tex ( Pvt) Ltd of 2007. In that case, the applicability of central Acts to cooperative societies was dealt with, with the apex court overruling the Bombay HC. It had said central legislation such as the Recovery of Debt Act was not applicable to cooperative societies, as there was a mechanism for recovery under the state cooperative societies Act. The bench was acting on a bunch of petitions seeking cancellation of the said notification Declares the central government notification dated January 28, 2003, bringing cooperative societies within the purview of the Act, null and void | ||
| Investor group's notice to BSE, NSE directors | ||
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New Delhi, 22 April An investor group registered with the capital markets regulator has issued notices to the directors of the National Stock Exchange ( NSE) and the BSE ( formerly Bombay Stock Exchange), asking them to take action to address alleged corporate governance failures in the matter of suspended companies. Midas Touch Investors Association, based in this city, has alleged the directors of the exchanges have failed to discharge their duties on redressing investor grievances. It has asked them to bring the defaulters to book immediately. It also asked the directors to intimate the action taken within 30 days. This is the latest salvo fired by the investors in the fight against suspended companies. The high court here has already issued notices to the exchanges, to the Securities and Exchange Board of India ( Sebi) and the government, in a public interest suit on the same matter, returnable by May 1. About ₹ 58,000 crore of shareholders' money is stuck in about 1,850 companies, which have been suspended from trading on the exchanges. Investors are unable to sell the shares as these no longer traded; the promoters and directors of these companies have gone free, in effect, as there is no action beyond the suspension of the stock. Midas notes the offence of failure to comply with the listing agreement, on conviction, is punishable with imprisonment up to 10 years and/ or fine up to ₹ 25 crore. However, the exchanges have not invoked these provisions. This inaction, spread over nearly nine years, is appalling and smacks of an unholy nexus, the association alleged. "We hereby urge you to take all the steps necessary to reform corporate governance of BSE, which ensures timely and expeditious administration of laws, rules and regulations, without fear or favour, in a transparent manner. A beginning may be made by taking expeditious action against companies which have failed to comply with the terms of the listing agreement," Virendra Jain, president, Midas Touch, said in a letter dated April 14. A similarly worded notice was sent to the NSE directors. SB Mathur, chairman, NSE, said a letter had come to them and the management "are in the process of sending it to me. In any case, other directors have brought the matter to the notice of management. They will be taking necessary action." Mathur's colleague on the NSE board and a veteran in the field of financial market architecture, Y H Malegam, said he was yet to see the notice. However, he said, the powers of an exchange were limited in the matter of suspended companies. " The relationship between a company and an exchange is in the nature of a contract of listing agreement. It will be dangerous not to suspend the companies which have not complied with the listing agreement. The power to administer the various provisions of the law with regard to listed companies is vested with Sebi," Malegam said. A call to Keki Mistry, a shareholder director of BSE went unanswered. Other BSE directors were not available for comment. Turn to TSI, Page 2 > Midas Touch alleges governance failure in the matter of suspended companies, seeks action VALUE RECOVERY |Around 1,850 companies suspended from trading |₹ 58,000 cr of investor money stuck |Midas says exchanges avoiding taking action against errant promoters |Directors fail in duties to protect investors |Midas wants response from directors in 30 days | ||
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Company Secretary, Chennai
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