| India Inc flags stalled projects with FM, expects ' big bang' steps |
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Mumbai, 8 April With a little more than ₹ 7 lakh crore of projects reportedly stalled at various stages of implementation, leaders of corporate India today complained to the finance minister of the problems they faced on the reasons why. Environmental clearances were one major grouse. Finance Minister PChidambaram today met the bankers and leaders of India Inc to discuss issues regarding the stalled projects, with the aim of resolving these issues and refuelling the investment cycle. The finance ministry had identified 215 projects stalled projects, each of ₹ 250 crore and above. These are mostly financed by public sector banks. Apart from environmental clearances, the projects are also stalled due to fuel linkages and land acquisition hurdles, said bankers. One of the chief executives (CEOs) who attended today's meeting said the minister assured them he would take up the matter with his counterpart in the environment ministry. Some of the biggest road and power projects are awaiting clearances from the latter ministry. The FM was also apprised about delays in land acquisition delaying many infrastructural projects, such as the Navi Mumbai airport. After todays meeting, CEOs say they now expect the government to take " big bang" steps in re- starting stalled projects. A CEO of an infrastructure company said the National Highways Authority of India would soon float tenders for road projects worth ₹ 30,000 crore for construction of 3,000 km of highways, abig confidence booster. "We are sitting with bankers and the industry to find why a particular project has been stalled and I am noting that down, to go back and try to remove that block," Chidambaram told reporters, after attending the closed- door meeting at the Taj Mahal Hotel in Colaba. 'Into the nitty- gritty' Industry captains seemed satisfied with the minister's effort to address the issues. " He went into alot of nitty- gritty ( over stalled projects). He was very concerned and, overall, a very clear mandate was that these projects need to be completed," Aditya Birla Group chairman Kumar Mangalam Birla told reporters. Chidambaram went into details on each of those projects, not just at a general level, Birla said. " He asked each of us to talk about the projects and apprise him about the issues. He personally took notes and I am sure he will take actions on whatever is required." Chiefs of Mumbai- based public sector banks – State Bank of India, Bank of Baroda, Union Bank of India, Central Bank of India — attended. Industry was represented by Anil Ambani, chairman, Reliance ADAG group; Prashant Ruia of Esaar; Ajit Gulabchand, chairman of Hindustan Construction and Madhu Kannan of Tata Sons, apart from K M Birla. Chidambaram further said, " We've identified 215 projects which for one reason or another are stalled. We've identified another 126 which are new projects, to which banks have sanctioned loans but which have not taken off." There are four or five reasons for which projects have been stalled, Chidambaram said. "The projects are held up due to issues like land acquisition, gas or coal linkages, environmental clearances, forest clearances and, in some cases, the inability or unwillingness of the bank to restructure the loans." Chidambaram said the next meeting of the Cabinet Committee on Investment would take up 31 oil and gas projects for clearance, as the ministry of defence, the Defence Research and Development Organisation and the ministry of oil and natural gas had sorted all the contentious issues. Finance Minister P Chidambaram after a meeting with bank chiefs and corporate leaders at the Taj Mahal Hotel, in Mumbai on Monday PHOTO: KAMLESH PEDNEKAR Finance minister reviews hundreds of stalled schemes with bankers, industrialists; gives assurance of action at his level |
| Sebi brass feels delay inevitable |
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Mumbai, 8 April The Securities and Exchange Board of India (Sebi) believes it is unlikely to get the extra powers it has been pressing for quite some time, in the near future. Some of the powers sought coincide with recommendations in the recent Financial Sector and Legislative Reforms Commission ( FSLRC) report. "My feeling is now that the FSLRC report has come, the government and Parliament will perhaps try to combine everything and take one major decision, rather than taking a decision on our own recommendation," said a top Sebi official. BN Srikrishna, chairman of the FSLRC, has noted the opposition from various quarters to his own recommendations, and also suggested Sebi could be given some of the powers sought while groundwork for a larger decision is taken. Some of the amendments sought by Sebi in the Act defining its powers include the authority to impose and recover monetary penalties, to attach properties without recourse to a court, power to pass disgorgement orders and establishment of special courts to deal with criminal prosecution for violation of securities law. Since 2009, the market watchdog has been recommending these to the government. However, as the FSLRC was set up to review all financial sector laws, Sebis demands were kept in abeyance. In February, Sebis hopes were revived when the finance minister's Budget speech said, "A proposal to amend the Sebi Act to strengthen the regulator is under consideration." However, nothing more has been said on this score. Former regulatory officials and lawyers feel the Sebi Act amendments should not wait till implementation of the FSLRC proposals, which could take a long time. MS Sahoo, secretary of the Institute of Company Secretaries of India, and a former full- time member of Sebi, believes some of the amendments sought are important and should be done right away, even by resorting to an ordinance. "The immediate concerns of investors cant wait till implementation of the Indian Finance Code, a very long- term project," he said. Sandeep Parekh, founder of Finsec Law Advisors, feels implementation of the " overwhelming changes" proposed by FSLRC in the near future is low. " Given the kind of time the Companies Bill has taken, despite wide agreement to adopt it, the chances of the report being accepted with the wide disagreement is quite low. Therefore, the Sebi Act amendments should not be held hostage to that adoption," he said. SEEKING MORE REGULATORY POWERS FSLRC recommendations controversial, so decision will take time, feel observers |
| Financial code provides compounding provisions |
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New Delhi, 8 April The new financial code drafted by the Srikrishna Commission has laid down clear provisions for compounding of offences. Through compounding, an accused pays charges in lieu of undergoing prosecution consequences. The process seeks to avoid lengthy legal proceedings and settle financial crime cases. Clauses 412- 414 under the draft code talk about elaborate provisions on the procedure for applying for and making a compounding order. It also says an application for such an order has to be disposed off within 90 days. The draft code submitted, alongwith a report by the Financial Sector Legislative Reforms Commission, requires the regulatory agency to provide clear guidelines on the offences that can be compounded, the amount of penalties, etc. The financial code Bill requires the regulator to stipulate through regulations the list of violations that cannot be compounded, the list of violations that can be compounded, the method of calculating any monetary penalty that may be imposed, the considerations that the financial agency may take into account while issuing acompounding order and the process for making an application for compounding action. The elaborate provisions of the new Bill are in contrast to single- word mentions of these concepts in the existing law. Through circulars, the Securities and Exchange Board of India ( Sebi) had spawned these words into an elaborate consent order and a compounding mechanism, which settled hundreds of cases. However, this mechanism has come under legal fire, with public interest litigation challenging its validity. The new code would put the regulators on a stronger footing and give them a better framework to rely on, said legal experts. "After the recent circular issued last year, Sebi has stopped accepting consent applications on cases relating to insider trading, takeover code violations, etc. Even in cases where it is accepting applications, it is asking applicants to include a disclaimer through which the consent settlement can be withdrawn if a high court decision goes against it," said Pavan Kumar Vijay, managing director, Corporate Professionals, a Delhi- based advisory. Delhi- based businessman Deepak Khosla has filed a public interest litigation in the Delhi High court, challenging the validity of the 2007 Sebi circular that operationalised the consent order mechanism. Last year, Sebi opposed this saying a new mechanism had replaced this. The hearing in this case is expected to resume later this week. The Securities and Exchange Board of India Act, which governs the functioning of the market regulator, didn't have any clear- cut or elaborate provision relating to compounding of offences, except Section 24 A. According to this section, " Any offence punishable under this Act, not being an offence punishable with imprisonment only, or with imprisonment and also with fine, may either before or after the institution of any proceeding, be compounded by a Securities Appellate Tribunal or a court before which such proceedings are pending." Section 15 T of the Sebi Act says, " No appeal shall lie to the Securities Appellate Tribunal from an order made" with the "consent of the parties". In 2007, these two sections were read together and a circular on "consent order and composition of offences" was issued by Sebi. In one stroke, a new mechanism was created through which practically every case, including those related to insider trading, takeover code violations or other unfair practices, could be settled for a fee. Last year, Sebi revised the framework following allegations of disproportionate settlement amounts alluding to corrupt practices to keep serious violations out of the consent mechanism. With no clear provisions in current law, Sebi's consent mechanism relies on circulars, which are often challenged in courts LEGAL CLARITY |Sebi Act did not provide elaborate provisions for consent/ compounding |Section 15T says orders made with " consent" of parties cannot be appealed against |Section 24A provided for compounding of criminal offences |These two sections were used to float an elaborate consent order mechanism |Petitions filed questioning legal validity of this mechanism |New code provides for elaborate provisions for compounding |
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