July 2021 – Page 66 – IFSCCodeof.in

CCEA clears LIC IPO; may hit market in Q4 of FY22

July 12, 2021 root Banking & Finance

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The Initial Public Offer (IPO) of Life Insurance Corporation of India (LIC) moved one more step with the Cabinet Committee of Economic Affairs (CCEA) green-lighting it.

“The CCEA has given in-principle approval,” a senior government official told BusinessLIne. Although the IPO timeline is not set, it is expected to hit the market in the fourth quarter of 2020-21. Also, there is no clarity on the size of IPO, but experts expect this to be the largest ever in India. The Centre has already notified all amendments to the LIC Act, 1956 to facilitate the IPO.

Earlier this month, in an interview to BusinessLine, Finance Minister Nirmala Sitharaman had said the LIC IPO “is on course”. However, she refused to give a timeline fearing it will lead to speculation.

FM blows the privatisation bugle

The CCEA nod is the second big move for the LIC IPO. On June 19, based on decisions by SEBI, the Finance Ministry notified relaxed norms for large companies planning to enter the stock market.

LIC IPO: Government likely to invite bids from merchant bankers this month

The IPO of LIC is critical as the Government needs resources to meet its steeply stepped up spending to tackle the Covid-19 pandemic. The Centre has set a target of mopping up ₹1.75-lakh crore through disinvestment, with ₹1-lakh crore expected from sale of stake in public sector banks and financial institutions. As on date, ₹7,645.7 crore has been collected.

LIC’s auditor appointment made a board process, ahead of IPO

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‘Bad bank’ is legally born, as NARCL gets incorporated with Corporate Affairs Ministry

July 12, 2021 root Banking & Finance

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The much-awaited bad bank — National Asset Reconstruction Company Ltd (NARCL) — has been incorporated, with the Corporate Affairs Ministry giving legal recognition few days back.

The NARCL — announced in this year’s Budget — will next approach the Reserve Bank of India for obtaining licence as an Asset Reconstruction Company (ARC).

“Registrar of Companies (RoC) Mumbai has given the registration for incorporation of NARCL. The other formalities are now being taken up,” sources close to the development said.

The capital structure will have a component of both equity and debt, they added. Public sector banks led by Canara Bank (which is likely to have 12 per cent stake) are expected to hold controlling stake in NARCL.

The other banks that are expected to pump in capital include State Bank of India, Bank of Baroda, Bank of India and IDBI Bank.

NARCL may eventually get capitalised about ₹7,000 crore.

The government will not have any direct equity contribution to NARCL. It will guarantee the security receipts issued by NARCL, which will buy the bad loans from banks. The Centre has earmarked ₹31,000 crore for the guarantees.

22 assets identified

Already, PSBs have identified 22 assets (stressed consortium loans of over ₹500 crore) worth about ₹82,500 crore that will be transferred to the bad bank in phases. In the long run, stressed assets worth as much as ₹2-lakh crore are expected to be transferred to NARCL.

The NARCL is expected to stick to the existing industry practice of paying 15 per cent in cash and 85 per cent in security receipts.

Proposed in the Budget

It maybe recalled that this year’s Budget had proposed the setting up of an ARC along with an asset management company (AMC) (to be called India debt management company) to take over the stressed debt of banks. The AMC will be controlled by the private sector and would help around the stressed assets for recovery.

A bad bank is basically an entity that houses the bad loans (non-performing assets) of a bank and will resolve or liquidate bad debt (stressed debt) to recover as much money as it can.

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Banks to invoke sureties given by promoters of 17 defaulting cos

July 12, 2021 root Banking & Finance

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Several banks, including State Bank of India and Bank of Baroda, are moving to invoke the personal guarantees given by promoters of 17 defaulting companies including Punj Lloyd, Amtek Auto, ABG Shipyard, Videocon, Varun Shipping, and Lanco. They have approached the National Company Law Tribunal.

“Banks have decided that for invoking the personal guarantees, only the lead lender in each case will go to the NCLT. Applications have been filed before NCLT Benches in Delhi, Ahmedabad, Kolkata and Mumbai,”said a source.

In May, the Supreme Court upheld the amendment to the Insolvency and Bankruptcy Code that allowed lenders to invoke the personal guarantees of promoters to recover their dues. This came as a major relief for lenders as under the corporate insolvency process, they are able to recover 35-40 per cent of the total debt in most cases. Now, in the absence of a credible repayment plan, creditors can initiate bankruptcy proceedings against the promoters. According to a PIL in the Supreme Court, lenders can recover ₹1.6-lakh crore from 40 defaulting promoters through this route.

Post SC order, banks move to assess value of promoters’ assets

However, one major hurdle is that many promoters are scam-tainted and are being investigated for fraud. DHFL’s former promoter Kapil Wadhawan, for example, is in prison for alleged fraud. “Most of these promoters in default are scam-tainted and their multi-billion rupee assets already attached by the Enforcement Directorate and the Economic Offences Wing of the Police. Getting the assets released from these agencies will take its own time,” said a lawyer on conditions of anonymity as he represents a defaulting promoter.

Nakul Sachdeva of L&L Partners, said though there is the Supreme Court judgment, the procedure for invoking personal guarantees is yet to be fully tested.

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Reserve Bank of India – Tenders

July 12, 2021 root Tenders

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College of Agricultural Banking, Reserve Bank of India Archives, Pune invites e-Tender for selection of venders for Scientific Preservation of Paper Records at the RBI Archives, College of Agricultural Banking, Pune. The tendering would be done through the e-Tendering portal of MSTC Ltd (http://mstcecommerce.com/eprochome/rbi). All the eligible firms / contractors must register themselves with MSTC Ltd through the above-mentioned website to participate in the tendering process. The Schedule of e-Tender is as follows:

a. e-Tender Name	Scientific Preservation of Paper Records at the RBI Archives, College of Agricultural Banking, Pune.
b. e-Tender no	RBI/CAB Pune//26/21-22/ET/26
c. Mode of Tender	e-Procurement System (Online Part I – Techno-Commercial Bid and Part II – Price Bid through www.mstcecommerce.com/eprochome/rbi)
d. Date of NIT available to parties to download	July 12, 2021 after 02.00PM
e. Earnest Money Deposit	Rs 15,000 (Rs. Fifteen thousand only) through NEFT – details as below along with the Part I / Technical – Commercial Bid. IFSC Code – RBIS0PUPA01 A/c number – 86140389
f. Last date of submission of EMD	August 2, 2021 up to 02.00 PM
g. Date of Starting of e-Tender for submission of on line Techno-Commercial Bid and price Bid at www.mstcecommerce.com/eprochome/rbi	July 12, 2021 after 02.00 PM
h. Date of closing of online e-tender for submission of Techno-Commercial Bid & Price Bid	August 2, 2021 up to 14.00 Hrs
i. Date & time of opening of Part-I (i.e. Techno-Commercial Bid) Date & Time of opening of Part- II (i.e. Price Bid)	August 2, 2021 at 15.00 Hrs. Date and time of opening of price bid will be informed separately to all the eligible bidders later.
j. Transaction Fee	Rs.1,180/- to be paid through MSTC Payment Gateway/NEFT/RTGS in favour of MSTC Limited or as advised by M/s MSTC Ltd.

Please note that there is no tender fees to download the tender document from Portal.

Applicants intending to apply will have to satisfy the Bank by furnishing documentary evidence in support of their possessing required eligibility and in the event of their failure to do so, the Bank reserves the right to reject their candidature.

Any amendments / corrigendum to the tender, if any, issued in future will only be notified on the RBI Website and MSTC Website as given above and will not be published in the newspaper.

Principal
College of Agricultural Banking, Pune

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Retail investors can open ‘gilt account’ via online portal

July 12, 2021 root Banking & Finance

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The Reserve Bank of India on Monday said retail investors can open a ‘Retail Direct Gilt Account’ (RDG Account) through an ‘online portal‘, which will be provided under its RBI Retail Direct’ scheme.

Under the scheme, the ‘online portal’ will also give registered users facilities such as access to primary issuance of government securities (G-Secs) and NDS-OM (Negotiated Dealing System — Order Matching (NDS-OM). The scheme will be a one-stop solution to facilitate investment in G-Secs by individual investors.

The RBI, in a statement, said the date of commencement of the scheme will be announced at a later date.

In February, the central bank had announced that as part of continuing efforts to increase retail participation in G-Secs and to improve ease of access, retail investors will be provided online access to the G-Sec market along with the facility to open their gilt securities account (‘Retail Direct’) with the RBI.

To encourage retail participation in G-Sec market, the government and RBI have so far introduced non-competitive bidding in primary auctions, permitted stock exchanges to act as aggregators/ facilitators for retail investors and allowed odd-lot segment in the NDS-OM secondary market, have been taken in the past.

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RBI may tweak rules to reduce ARCs’ cash outgo when buying stressed assets

July 12, 2021 root Banking & Finance

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The Reserve Bank of India may tweak the ‘skin in the game’ criteria for Asset Reconstruction Companies (ARCs) in cases where they link-up with an investor to buy stressed assets from lenders on 100 per cent cash basis.

The central bank is examining the possibility of lowering an ARC’s contribution to acquire a stressed asset on all-cash basis from 15 per cent of the acquisition price to 2.5 per cent to 5 per cent.

The reason for this is that there are investors willing to bring in a chunk of money (95-97.5 per cent of the acquisition price) for buying stressed assets.

Given banks’ preference to sell their stressed assets on all-cash basis, the lowering of the ‘skin in the game’ requirement will alleviate ARC’s capital constraints and encourage them to step up purchase of bad loans. This, in turn, will help banks clean up their books. In cases where ARCs acquire stressed assets through a mix of cash and stressed assets, they are required to invest a minimum of 15 per cent of the security receipts. Hari Hara Mishra, Director, UV ARC, observed that in three years from 2018 to 2020, the cash component of purchase consideration paid by ARCs to seller banks and financial institutions went up three times from 28 per cent to 87 per cent.

“There is a long-felt need to reduce minimum contribution by ARCs in 100 per cent cash transactions from existing 15 per cent to 2.5 per cent in line with guidelines as applicable to Alternative Investment Funds (AIFs),” he said.

Reducing stress in sector

Mishra emphasised that this would enable ARCs to arrange more funds and absorb more non-performing assets, thereby reducing stress in the financial sector.

Pallav Mohapatra, MD & CEO, ARCIL, said: “What we want is that when an ARC, along with an investor, acquires a stressed asset on a 100 per cent cash basis from a bank, in such cases the regulator should, I think, reduce the 15 per cent requirement of contribution by ARCs. This can be reduced to 5 per cent.”

Mohapatra underscored that investors are proactive when it comes to seeking regular updates on resolution of stressed assets and recovery. Hence, ARCs will be on their toes despite lower skin in the game.

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Bill for higher deposit cover to be introduced in Monsoon Session

July 12, 2021 root Banking & Finance

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The government has listed a Bill for the Monsoon Session of Parliament to enable deposit insurance cover of ₹5 lakh. However, it has not included a Bill to ban private cryptocurrencies.

New Bills

It has prepared a list of 17 new Bills to be introduced during the session. This includes a Bill to amend the Deposit Insurance and Credit Guarantee Corporation Act (DIGCS), the Limited Liability Partnership Act, the Electricity Act, and the Coal Bearing Areas (Acquisition and Development), among others. The list also includes a Bill to amend the Insolvency & Bankruptcy Code.

According to the Lok Sabha bulletin, one of 17 new Bills is the ‘Deposit Insurance and Credit Guarantee Corporation (Amendment) Bill, 2021.’

The purpose of this Bill is to enable easy and time-bound access for depositors to their hard-earned money and to further instill confidence in them about the safety of their money. “The objective is to enable access by depositors to their savings through deposit insurance in a time-bound manner in case there is suspension of banking business of the insured bank under various provisions of the Banking Regulation Act, 1949,” said the bulletin.

Finance Minister Nirmala Sitharaman had said that last year the government had approved an increase in the Deposit Insurance cover from ₹1 lakh to ₹5 lakh for bank customers.

Access to deposits

She also said that amendments to the DICGC Act aims to streamline the provisions so that if a bank is temporarily unable to fulfil its obligations, the depositors of such a bank can get easy and time-bound access to their deposits to the extent of the deposit insurance cover.

Another important legislature is the Coal Bearing Areas (Acquisition and Development) Amendment Bill, 2021. It has three objectives – make provisions for leasing of land and coal mining rights vested under the CBA Act to any company (including private sector company), which has become a successful bidder in the auction of coal blocks conducted under the MMDR Act or the CMSP Act; land acquired under the Act shall be utilised for coal mining operations and allied or ancillary activities as may be prescribed by Central government; and to make provisions for acquisition of lignite bearing areas under the CBA Act.

Amendment in Limited Liability Partnership Act, 2008 aims to decriminalise 12 compoundable offences, which deal with procedural and technical violations; omission of two provisions is also proposed.

A Bill to amend Electricity Act will entail de-licensing of the distribution business and bring in competition.

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Reserve Bank of India – Press Releases

July 12, 2021 root Press Releases

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April 14, 2015

Dear All

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.

Thank you for your continued support.

Department of Communication

Reserve Bank of India

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PNB Housing Finance: ‘Stake sale singled out’

July 12, 2021 root Banking & Finance

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PNB Housing Finance on Monday told the Securities Appellate Tribunal that the ₹4,000-crore stake sale to a clutch of investors, led by private equity firm Carlyle Group, was being singled out by SEBI when similar fund-raising by other entities have gone through without any objections.

Senior advocate Janak Dwarkadas, arguing the case on behalf of PNB Housing, said that SEBI did not have jurisdiction on the issue.

In June, the Securities and Exchange Board of India had asked PNB Housing Finance not to go ahead with the stake sale, until the housing finance company undertakes an independent valuation of its shares. The market regulator said the notice given by PNBHF on May 31 for an Extraordinary General Meeting to approve the stake sale is “ultra-vires of Article of Association (AoA) and shall not be acted upon until the company undertakes the valuation of shares.”

PNB Housing challenged the SEBI order after which SAT had allowed PNB Housing to go through with the EGM but asked it to not disclose the voting results until further orders.

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Top 5 Lenders With The Cheapest Interest Rates On Gold Loans

July 12, 2021 root Personal Finance

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Investment

oi-Vipul Das

|

Published: Monday, July 12, 2021, 19:42 [IST]

When it comes to covering financial emergencies or fulfilling any short-term personal finance goal instantly, availing of a gold loan can be a good move. Gold loans are also called secured loans implying that you can apply for a loan from any bank or Non-Banking Financial Companies (NBFC) by pledging your gold articles as collateral or security which should be between 18-24 carats. To approve the loan application, the concerned lender would first check the quality and carat of the pledged gold after which the loan amount will be sanctioned depending on the market price of gold which is calculated according to the prevailing price.

Generally, lenders will give a gold loan for up to 75% of the market price of the pledged gold article. So if you have a short-term personal finance goal and want to take a gold loan with the cheapest rates, then here are the top 5 public sector banks, private sector banks, and NBFCs that are currently offering the lowest or best affordable interest rates on gold loans.

Top 5 Public Sector Banks With The Cheapest Interest Rates On Gold Loans

Among the commercial banks, Punjab & Sind Bank followed by Bank of India and Canara Bank are currently promising the cheapest rates on gold loans. Here are the top 5 government banks which are currently promising the lowest interest rates on gold loans depending on the loan amount.

Banks	Rate of interest in%
Punjab & Sind Bank	7.00 to 7.50
Bank of India	7.30 to 8.95
Canara Bank	7.35
State Bank of India	7.5
Andhra Bank	7.60 onwards
Source: Bank Websites

Top 5 Private Sector Banks With The Cheapest Interest Rates On Gold Loans

Among the leading private sector banks of India, HDFC Bank followed by Dhanlaxmi Bank are currently offering the best interest rates on gold loans. Here are the top 5 private sector banks of India that are providing the cheapest interest rates on gold loans:

Banks	Rate of interest in%
HDFC Bank	8.95 to 17.20
Federal Bank	8.50 onwards
Karur Vysya Bank	8.60 to 9.60
ICICI Bank	9.00 to 19.76
Dhanlaxmi Bank	9.65
Source: Bank Websites

Top 5 NBFCs Offering The Cheapest Interest Rates On Gold Loans

Here are the top 5 non-banking financial companies that are currently promising the cheapest interest rates on gold loans depending on the minimum to the maximum loan amount.

NBFCS	Rate of interest in%
IIFL Finance	9.24 to 24
Shriram Transport Finance Company Limited	11.5 onwards
Muthoot Finance	11.99
Bajaj Finance Ltd.	11.99 onwards
Manappuram Finance Ltd.	12.00 onwards
Source: Official Websites

Story first published: Monday, July 12, 2021, 19:42 [IST]

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