Welcome to the refurbished site of the Reserve Bank of India.
The two most important features of the site are: One, in addition to the default site, the refurbished site also has all the information bifurcated functionwise; two, a much improved search – well, at least we think so but you be the judge.
With this makeover, we also take a small step into social media. We will now use Twitter (albeit one way) to send out alerts on the announcements we make and YouTube to place in public domain our press conferences, interviews of our top management, events, such as, town halls and of course, some films aimed at consumer literacy.
The site can be accessed through most browsers and devices; it also meets accessibility standards.
Please save the url of the refurbished site in your favourites as we will give up the existing site shortly and register or re-register yourselves for receiving RSS feeds for uninterrupted alerts from the Reserve Bank.
Do feel free to give us your feedback by clicking on the feedback button on the right hand corner of the refurbished site.
Welcome to the refurbished site of the Reserve Bank of India.
The two most important features of the site are: One, in addition to the default site, the refurbished site also has all the information bifurcated functionwise; two, a much improved search – well, at least we think so but you be the judge.
With this makeover, we also take a small step into social media. We will now use Twitter (albeit one way) to send out alerts on the announcements we make and YouTube to place in public domain our press conferences, interviews of our top management, events, such as, town halls and of course, some films aimed at consumer literacy.
The site can be accessed through most browsers and devices; it also meets accessibility standards.
Please save the url of the refurbished site in your favourites as we will give up the existing site shortly and register or re-register yourselves for receiving RSS feeds for uninterrupted alerts from the Reserve Bank.
Do feel free to give us your feedback by clicking on the feedback button on the right hand corner of the refurbished site.
Private lender IDFC First Bank on Saturday reported a net loss of Rs 630 crore in the April-June quarter due to provisioning measures for cushioning the impact of the second wave of the Covid-19 pandemic. The bank had posted a net profit of Rs 93.55 crore in the year-ago quarter ended in June 2020 and that of Rs 127.81 crore in the previous quarter ended in March 2021.
“Net loss of Rs 630 crore for Q1FY22 is because of prudent provisions for Covid wave 2.0. Covid provision pool increased from Rs 375 crore to Rs 725 crore during the current quarter on a prudent basis to act as a cushion for Covid impact,” IDFC First Bank said in a release.
The bank expects to collect a reasonable proportion of these dues in due course, it added.
Total income (net of interest expense) grew by 36 per cent year-on-year to Rs 3,034 crore in Q1FY22, driven by the growth in NII and fee income, the bank said. Its total income during Q1FY21 stood at Rs 2,229 crore in June 2020 quarter.
The bank said its net interest margin (NIM) — the difference of interest earned and expended — was the highest ever at 5.51 per cent during the reported quarter. The NIM was 4.86 per cent in year ago quarter.
The net interest income (NII) rose by 25 per cent year-on-year to Rs 2,185 crore.
On the asset front, bank’s gross and net non-performing assets (NPAs) were at 4.61 per cent and 2.32 per cent respectively as of June 30, 2021.
The NPA ratios were up from 1.99 per cent and 0.51 per cent respectively, from year ago period.
“The GNPA and NNPA include impact of 84 bps (basis points, which is one hundredth of a percentage) and 71 bps respectively on account of one Mumbai based infra toll account which slipped during the quarter. The bank expects no material economic loss in this account eventually as this is an operating toll road and is only delayed.”
Bank deposits were up by 36 per cent to Rs 84,893 crore. The retail loan book of the lender increased to Rs 72,766 crore as on June 30, 2021 from Rs 56,043 crore.
The year-on-year growth of the retail loan book was 27 per cent excluding Emergency Credit Guarantee Line loan book of Rs 1,645 crore. However, it declined by 1.2 per cent on a sequential basis. The wholesale loan book fell by 15 per cent to Rs 34,232 crore from Rs 40,275 crore.
Capital adequacy ratio stood at 15.56 per cent with CET-1 (common equity tier-1) ratio at 14.86 per cent. Average liquidity coverage ratio (LCR) was at 166 per cent for Q1FY22.
“Within just two years we have made tremendous progress at the bank. Our CASA (current account savings account) ratio is high at 50.86 per cent despite reducing savings account interest rates by 200 bps recently, which points to the trust customers have in our bank and service levels.
“Because of our low cost CASA, we can now participate in prime home loans business, which is a large business opportunity,” V Vaidyanathan, Managing Director and CEO, IDFC First Bank, said. Regarding the loss during the quarter, he said the bank has made prudent provisions for Covid second wave.
“We expect provisions to reduce for the rest of the three quarters in FY22. We guide for achieving pre-Covid level gross and net NPA, with targeted credit loss of only 2 per cent on our retail book by Q4FY 22 and onwards, assuming no further lockdowns,” he said further.
The country’s largest lender State Bank of India (SBI) on Saturday announced waiving processing fee on home loans till August-end. Currently, the processing fee on home loans is 0.40 per cent.
SBI said it is the bank’s limited period ‘Monsoon Dhamaka Offer‘, through which a home loan customer can gain substantially. The state-owned lender said the offer will help revive the consumer sentiments.
“There could not be a better time to buy a house, considering SBI home loan interest rates start at just 6.70 per cent,” SBI said in a release. The Monsoon Dhamaka Offer is for a limited period ending on 31st August 2021, SBI said.
“We believe this offer of processing fee waiver will facilitate and encourage home buyers to take decision with ease, as interest rate is at its historic low. We strive to be a banker to every Indian and thereby, be partners in nation-building,” C S Setty, MD (Retail & Digital Banking), SBI said.
There will be a concession of 5 bps (0.05 percentage) for home loans applied through the bank’s one-stop YONO App. Women borrowers will be eligible for concession of 0.05 percentage (5 basis points/bps) on the loan rate.
Among the debt investors having a low-risk appetite and a short personal finance goal to meet from the assured returns of their investments, investing in recurring deposits (RD) is a smart option to opt for. Just like fixed deposits, recurring deposits are one of the most popular fixed-income schemes where the investors including senior citizens are required to contribute on a monthly basis towards their RD account to get interest amount along with the capital invested at maturity. Talking about the interest rates, investors need to keep in mind that the interest rate of recurring deposits is similar to that of fixed deposits of banks which are guaranteed, and also deposits made by them are insured by DICGC up to Rs 5 lakhs.
Apart from the benefits, investors must need to know that recurring deposits do not provide tax exemptions and may face penalties if they make a premature withdrawal before maturity. Recurring deposits are the best bet for the investors with low-income levels who want to start investing with a low amount per month just like SIP instead of a lump sum. As our topic suggests here we are talking about recurring deposits for senior citizens which simply implies that they will get additional rates on their deposits as compared to the regular citizens. By keeping all the above factors in mind, here we picked up the top 10 banks that are promising the best interest rates on recurring deposits for senior citizens.
Top 10 Small Finance Banks Offering Higher Returns On Recurring Deposits For Senior Citizens
For a deposit amount of less than Rs 2 Cr, below framed are the top 10 small finance banks that are not only offering higher returns than leading private and public sector banks but also allow depositors to avail the benefit of deposit insurance cover provided by DICGC.
Sr No.
Banks
Interest Rates
Tenure
W.e.f.
1
North East Small Finance Bank
8.00%
2 Year
April 19, 2021
2
Utkarsh Small Finance Bank
7.50%
24 months to 36 months
July 1, 2021
3
Ujjivan Small Finance Bank
7.25%
27 months to 60 months
March 5, 2021
4
Jana Small Finance Bank
7.25%
36 Months – 60 Months
June 10, 2021
5
Fincare Small Finance Bank
7.25%
59 months 1 day to 66 months
July 29, 2021
6
Equitas Small Finance Bank
7.00%
90 months to 120 months
June 1, 2021
7
ESAF Small Finance Bank
7.00%
365 days & 366 days
02.05.2021
8
Suryoday Small Finance Bank
6.75%
12 months to 18 months
June 21, 2021
9
Capital Small Finance Bank
6.75%
900 days
June 3, 2021
10
AU Small Finance Bank
6.75%
25 Months to 36 Months and 61 Months to 120 Months
June 23, 2021
Source: Bank Websites
Top 10 Private Sector Banks Providing Good Returns On Recurring Deposits For Senior Citizens
Here are the top 10 private lenders that are now offering the best returns on recurring deposits of less than Rs 2 Cr for senior citizens.
Sr No.
Banks
Interest Rates
Tenure
W.e.f.
1
Yes Bank
7.25%
5 years upto 10 Years
June 3, 2021
2
RBL Bank
7.00%
60 months to 60 months 1 day
July 2, 2021
3
DCB Bank
7.00%
36 months to 120 months
May 15, 2021
4
Bandhan Bank
6.75%
1 year to 3 years
June 7, 2021
5
IndusInd Bank
6.50%
12 months to 61 month
July 23, 2021
6
IDFC First Bank
6.50%
36 months to 60 months
May 1, 2021
7
Axis Bank
6.50%
5 years to 10 years
22.06.2021
8
ICICI Bank
6.30%
Above 5 years and up to 10 years
21.10.2020
9
HDFC Bank
6.00%
90 months to 120 months
August 25, 2020
10
Kotak Mahindra Bank
5.75%
5 years upto 10 Years
July 23, 2021
Source: Bank Websites
Top 10 Public Sector Bank Promising Best Interest Rates On Recurring Deposits For Senior Citizens
Below are the top 10 government banks that are now offering higher returns on recurring deposits for senior citizens.
Sr No.
Banks
Interest Rates
Tenure
W.e.f.
1
Bank of Baroda
6.25%
3 years to 10 years
16.11.2020
2
State Bank of India
6.20%
5 years and up to 10 years
09.07.2021
3
Union Bank of India
6.10%
5 years to 10 years
08.02.2021
4
Canara Bank
6.00%
3 years to 10 years
16.05.2021
5
Punjab & Sind Bank
5.80%
3 years to 10 years
July 14, 2021
6
IDBI Bank
5.80%
3 years to 5 years
01.05.2021
7
Punjab National Bank
5.75%
3 years to 10 years
05.02.2021
8
Indian Bank
5.75%
3 years to 5 years
09.11.2020
9
Indian Overseas Bank
5.70%
444 days to 3 years and above
01.07.2021
10
Bank of India
5.65%
2 years to 10 years
08.01.2021
Source: Bank Websites
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Story first published: Saturday, July 31, 2021, 17:19 [IST]
This fund has been accorded a 5-star rating from Morningstar. Let’s take a look at how the fund has performed over the last few years. This is a Flexi Cap fund, which means the fund manager has the choice to move money from largecap funds to mid and small cap funds and the other way round as well.
Returns from Axis Flexi Cap Fund
1- year
3-year, annualized
5-year, annualized
49.48%
17.22%
NA
Other details of Axis Flexi Cap Fund
NAV
Rs 18.61, growth
Assets under management
Rs 8,566 crores
Investment strategy
Equity
Risk
Very high
Axis Flexi Cap Fund SIPs: For those willing to take risk
Investors who are long-term investors and are willing to take a risk can go for these SIPs. An SIP started 3-years ago in Axis Flexi Cap Fund for Rs 10,000 every month is worth Rs 5.25 lakhs today. That is a remarkable set of returns from the fund. In fact, most of the equity funds from the Axis Mutual Fund stable have done well over the years.
It’s important to note that markets have gone from 33,000 points on the Sensex a year ago to 53,000 points. It is therefore not worth considering lumpsum at this stage and investors should stick to Systematic Investment Plans. Apart from Axis Flexi Cap Fund we are also recommending two other funds below for long term investors.
Quant Midcap Fund
Quant Midcap Fund is a high risk investment, given that the fund invests invests in midcaps, which are volatile. However, if you go through the SIP route this is taken care off, as the law of averages applies.
Returns from Quant Midcap Fund
1- year
3-year, annualized
5-year, annualized
88.17%
23.52%
19.03%
Other details of Quant Midcap Fund
NAV
Rs 109.56, growth
Assets under management
Rs 110 crores
Investment strategy
Equity
Risk
Very very high
Quant Midcap Fund: A decent performer
Quant Midcap Fund has been rated as 5-star by Morningstar. Investors can start a SIP in the fund with a sum of Rs 1,000 every month. The fund size is not too large and this gives the fund manager some flexibility when investing.
It’s advisable to start an SIP with a small sum at the moment, given that the markets are high and when the markets fall, you can increase the size of the SIP. This would be a good strategy for investors to adopt for Systematic Investment Plans, given that the Sensex is at 53,000 points. Quant Midcap Fund is an investment for those willing to take serious risk. If you do not have an appetite for the same, avoid this mutual fund scheme. We at goodreturns are not recommending any lumpsum investment at the moment, as the markets are overpriced.
SBI Small Cap Fund
This is another fund that is high risk, but, is rated 5-star by Morningstar. This fund has been a consistent performer and has given good returns over the last 1-year. Here are
Returns from SBI Small Cap Fund
1- year
3-year, annualized
5-year, annualized
88.28%
21.86%
21.03%
Other details of SBI Small Cap
NAV
Rs 95.30, growth
Assets under management
Rs 9,010 crores
Investment strategy
Equity
Risk
Very very high
SBI small cap fund: Invest small amounts
The portfolio of SBI Small Cap Fund includes names like Elgi Equipments, V-Guard Industries, Carborundum Universal and Sheela Foam. The fund has given superb returns in the last 1-year. We suggest to invest small amounts at the current juncture and gradually increase the same, should the markets fall. If you redeem your units before a period of 1-year there is a charge of 1% that would be levied as load fees.
An SIP can begin with a sum of Rs 500 and investors need to hand-over 12 cheques for the purpose of investments.
Disclaimer
Please note, investing in mutual funds is risky and investors should exercise caution. Please do adequate research. Neither Greynium Information Technologies, nor the author would be responsible for losses incurred based on the above article.
In a ruling that will help infrastructure and construction companies, the Delhi High Court said forcing a minimum claim period of 12 months for bank guarantees is wrongful, rejecting interpretations that existing laws rendered shorter claim periods void.
Ruling on a petition filed by engineering conglomerate Larsen & Toubro Ltd against Punjab National Bank, a single-judge bench of the High Court observed, “It is clear that respondent No 1 (PNB) is erroneously of the view that they are in law mandated to stipulate a claim period of 12 months in the bank guarantee, failing which the clause shall be void under Section 28 of the Contract Act.”
The court directed the lender to take a relook at such agreements.
“It (Section 28) deals with the right of the creditor to enforce his rights under the bank guarantee, in case of refusal by the guarantor to pay, before an appropriate court or tribunal,” Justice Jayant Nath observed in a 43-page order issued on Wednesday. It does not deal with the claim period – a time within which the beneficiary is entitled to claim the guarantee.
Experts said the ruling will particularly benefit infrastructure and construction companies that need to issue bank guarantees while fulfilling contracts for government bodies and public sector undertakings.
“This decision will have far-reaching consequences because it will give both banks and companies the much-needed flexibility in entering into contracts related to bank guarantees,” said Ashish K Singh, managing partner of law firm Capstone Legal.
Anil Goel, founder and chairman of insolvency professional company AAA Insolvency Professionals, said, “Construction companies bidding for projects should have the flexibility to bank guarantee from banks. Multiple options to get it should help them bid for more projects and save costs substantially.”
L&T, in its petition, argued that PNB’s insistence on a bank guarantee (BG) for 12 months, due to misinterpretation of Section 28, has unnecessarily made the company liable to pay commission charges for such extended BG when the principal contract would be for a much shorter period.
Also, companies have to maintain collateral security – or margin money against which a bank guarantee is issued – for supporting an extended claim period, which affects their capability to do business by entering new contracts, L&T said.
Hemant Kumar, group general counsel of L&T, confirmed the passing of an order by the Delhi High Court but refused to divulge any details.
An email query to PNB remained unanswered as of press time Friday.
L&T had made the Indian Banks’ Association (IBA) and the Reserve Bank of India (RBI) parties in the case.
As per the court order, PNB’s stand is due to letters issued by IBA on December 12, 2018, to its member banks, stating that if a bank issues a claim period of less than one year on top of the guarantee period then such a bank guarantee would not have the benefit of Exception 3 to Section 28 of the Contract Act.
Exception 3, inserted as an amendment to the Act in 2013, allowed lenders to limit the period to make a claim up to one year, down from the minimum of three years provided under the Limitation Act.
BGs are provided on a case to case basis depending on banks and individual clients. The margin money varies, but normally it is about 10-20% of the bank guarantee amount, industry insiders said.
Federal Reserve Governor Lael Brainard laid out a range of reasons for “urgency” around the issue of developing a U.S. central bank digital currency, including the fact that other countries such as China are moving ahead with their own.
“The dollar is very dominant in international payments, and if you have the other major jurisdictions in the world with a digital currency, a CBDC (central bank digital currency)offering, and the U.S. doesn’t have one, I just, I can’t wrap my head around that,” Brainard told the Aspen Institute Economic Strategy Group. “That just doesn’t sound like a sustainable future to me.”
Fed officials are taking a deep dive into the digital payments universe, collecting public feedback on the potential costs and benefits as well as design considerations with a view to publishing a discussion paper in early September.
Fed Chair Jerome Powell in comments earlier this month described the analysis as a key step in accelerating the Fed’s efforts to determine if it should issue its own CDBC.
“One of the most compelling use cases is in the international realm, where intermediation chains are opaque and long and costly,” Brainard said on Friday.
But there are domestic reasons too for a U.S.-backed digital currency, she said: the dramatic rise in stable coins, a form of cryptocurrency pegged to a conventional currency such as the U.S. dollar but not backed by any government.
Stable coins could proliferate and fragment the payment system, or one or two could emerge as dominant, she said. Either way, “in a world of stable coins you could imagine that households and businesses, if the migration away from the currency is really very intense, they would simply lose access to a safe government-backed settlement asset, which is of course what currency has always provided.”
A CBDC could also help solve other problems, she suggested, including the difficulty during the pandemic of getting government payments to people without bank accounts, who also tend to be the very people who need the payments the most.
The Brokerage has a “buy” on the stock of Union Bankwith a price target of Rs 55, which is higher by almost 46% from the current levels of Rs 37. According to the brokerage firm Union Bank reported healthy operating performance, supported by higher other income and improving margin trajectory, despite sluggish business growth. Domestic net interest margins expanded by 71 basis points QoQ to 3.11%.
Select valuation parameters for Union Bank from Motilal Oswal (estimates)
FY 2021-22
FY 2022-23
EPS
Rs 7.9
Rs 11.8
Price to earnings
4.81
3.2
Price to book value
0.4
0.3
Price to a/bv
0.5
0.5
Union Bank: Operating performance showing signs of recovery
Union Bank reported a net profit of Rs 11.8 billion (+255% YoY), supported by higher treasury gains of Rs 11.1 billion and recovery from written of account of Rs 3.3 billion, even as total provisions stood elevated Rs 35 billion.
According to broking firm, Motilal Oswal slippages stood elevated (4.8% annualized), led by higher slippages in the MSME and two large corporate accounts slipping in 1QFY22.
“However, higher write-offs and up gradations aided stable asset quality on a sequential basis. SMA-2 overdue stood at 3.7% of loans, and restructured book stood at 2.7% of net loans. We conservatively estimate RoA/RoE of 0.6%/11.4% by FY23E. We resume coverage with a Buy rating,” the brokerage has said.
Buy the stock of Shriram City Union Finance
The brokerage also has a buy on the stock of Shriram City Union Finance, post the company’s quarterly numbers. According to the brokerage there has been no major deterioration in asset quality and the restructuring too has been minimal. The firm has noted that the Capital adequacy remained strong with Tier I at 30% (up 90bp QoQ).
Valuations matrix from Motilal Oswal for Shriram City Union, estimates
FY 21-22
FY 22-23
P/E
9.7
8.00
Price to book value
1.3
1.1
Dividend yield
1.4%
1.4%
Shriram City Union: Loan book muted
“Loan book growth has remained muted, given the impact on disbursements (from lockdowns). However, liability-side and liquidity issues faced by the company immediately after the outbreak of the pandemic have now receded into the sidelines,” Motilal Oswal has said.
While cost of funds (calculated) declined 21 basis points sequentially to 8.9%, calculated yields (on AUM) stood at 19.7% (up 20 basis points QoQ). Spreads improved by 40 basis points QoQ to 10.8%.
“Despite a presence in vulnerable product segments like MSME, 2W, and Personal loans, asset quality performance has been encouraging, with minimal restructuring. With an equity infusion of Rs 2 billion from the parent, Shriram Housing will be looking forward to strong growth and carving out its niche in the Affordable Housing Finance segment,” the brokerage has said.
Disclaimer
Investing in stocks poses a risk of financial losses. Investors must therefore exercise due caution. Greynium Information Technologies, the author, and the brokerage houses are not liable for any losses caused as a result of decisions based on the article. Investors should take care because the markets are near record highs.
For instance, Essar Steel India Limited was acquired by Arcelor Mittal India Pvt. Ltd. for Rs. 41,018 crores as against the outstanding dues of Rs. 49,473 crores.
By Hemant Batra
What was positioned by Indian law makers and policy wonks as the best antidote for rising non-performing assets (NPAs) of banks and financial institutions, resulting in a larger number of companies going into the liquidation process, has ended up being a successful rehabilitating and restructuring formula for these bankrupt companies. These distressed assets have become the new targets for bigger companies planning to grow through the organic route.
The rules and regulations framed under the Insolvency and Bankruptcy Code (IBC) have opened-up countless opportunities and prospects for merger and acquisition (M&A) deals in India. These opportunities have been used productively by companies and investors wanting to diversify into new businesses or expanding and consolidating their existing businesses.
After all, the statutory mandate or pre-requisite of the IBC is to provide a resolution or long-term sustainability of distressed assets of corporate debtors rather than take the liquidation route, which was kept as a solution of last resort. Then there are elements of concessions, adjustments and alterations under the Code, which can be exercised by owners, stakeholders, and creditors in specific cases to ensure that corporate restructuring is approved under the IBC, and results in the revival of the bankrupt entity.
Under the IBC, there are two principal avenues for mergers and acquisition (M&A) of assets. The first is the fast-track process, where the corporate debtor’s assets are unencumbered, meaning outside the ordinary course of business, like personal things such as books, vehicles etc. So, the new promoter takes over only the existing business with all its assets. Secondly, where the assets are encumbered or a part of the business, and the creditors have already initiated a corporate insolvency resolution process (CIRP) against the corporate debtor.
In the case of the former too the approval of a committee of creditors (CoC) becomes a precondition before any takeover, though it is a much faster process. In the case of the latter, the resolution plan crafted by the CIRP, may provide for transfer or sale of all or part of the assets of the corporate debtor to one or more persons, and substantial acquisition of shares, or the merger or consolidation of the corporate debtor with one or more persons. The resolution plan may also allow for divesting all or some parts of the corporate debtor’s assets through M&A action over a predetermined period following the successful conclusion of the CIRP.
As the saying goes, the devil is in the details. Thus, it is imperative to comprehend the specifics of the insolvency resolutions, and study the successful M&A, which have been concluded since December 2016, when the IBC came into existence, before taking any decision. According to official figures, the IBC has effectively rescued 308 corporate debtors as of December 2020 through resolution plans including M&A. These corporate debtors owed Rs. 4.99 lakh crore to the creditors. Under IBC, the creditors recovered Rs. 1.99 lakh crore, which was 193 per cent more than the realisable value of the assets.
The IBC has facilitated the recovery of NPAs by banks through the M&A route and corporate restructuring. Only a handful of cases accounted for a large proportion of public debts. The creditor banks commenced the resolution process of 12 large accounts in mid-2017. Their total recoverable dues stood at Rs. 3.45 lakh crore as against the low liquidation value of about one-fifth of the recoverable dues. Out of these 12 big corporations, nine qualified for lucrative M&A and fetched worthwhile recoveries from the banks’ perspective. For instance, Essar Steel India Limited was acquired by Arcelor Mittal India Pvt. Ltd. for Rs. 41,018 crores as against the outstanding dues of Rs. 49,473 crores.
Other big defaulting accounts like those of Bhushan Steel Limited, Bhushan Power & Steel Limited, Jaypee Infratech Limited, Alok Industries Limited etc. were also acquired by bigwigs like Vedanta Ltd. Monnet Ispat & Energy Limited, Reliance Industries Limited, NBCC (India) Limited etc. at very high value. These successful instances of M&A speak a lot about the efficiency and usefulness of the IBC.
The new route of M&A through distressed assets, however, is facing a few challenges. There are always challenges associated with bidding and acquisition of distressed assets. Valuations of such assets need to be adequately insulated from its erstwhile promoters and owners, who use proxies to either derail the bidding process, or jack up the valuations.
Further, despite the protection provided by the law regarding the marketability of assets, the Supreme Court judgement in the Ghanshyam Vs Edelweiss of April 2011, and the rule of no interference from any other civil court in respect of any action taken or to be taken with regard to any order passed by the Adjudicating Authority i.e. the National Company Law Tribunal, some acquirers and investors had to face some legal complications in their M&A objective.
For instance, the question of how the penalty for regularising any non-compliance of the previous management is being imposed on the new management still remains unanswered? Similarly, how the previous clearances/regularisation are supposed to be treated, still remain unclear.
Hence, in spite of all statutory assurances for smooth acquisition and corporate restructuring, the new entrants may have to keep in mind the significance of due diligence of the nature and status of assets, and also ensure that there is no overlap of any legal proceedings involving the assets of the promoters, especially quasi-criminal proceedings.
(The author is a Delhi-based corporate and public policy lawyer and counsel. Views expressed are personal and not necessarily that of Financial Express Online.)
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