Category: Banking & Finance

Our Bureau

The Reserve Bank of India (RBI) and CARE Ratings have challenged the Kolkata National Company Law Tribunal’s order which allowed Srei Equipment Finance Ltd’s Scheme of Arrangement with creditors in the National Company Law Appellate Tribunal.

The Scheme of Arrangement proposed moratorium in terms of coupon payments during January 1, 2021, to June 30, 2021, along with postponement of redemption dates based on the type of creditor.

SEFL is a wholly owned subsidiary of Srei Infrastructure Finance Limited (SIFL).

The NCLT order said: “…We direct that in the meantime till further orders, the creditors (including representative security and debenture trustees) of the applicant company covered under the scheme shall maintain status quo with respect to their respective contractual terms dues claims and rights and the creditors (including security and debenture trustees), and all governmental or regulatory authorities shall be estopped from taking any coercive steps, including reporting in any form and/or changing the account status of the company from being a standard a standard asset, which will prejudicially affect the company and/or sanctioning and/or implementation of the scheme.”

The tribunal further directed that the credit rating agencies shall not consider any such non-payment to be a default under the respective debt documents and shall maintain the rating(s) of SEFL at least that of investment grade.”

Referring to the NCLT order, CARE Ratings, in a statement, said that in view of the NCLT order, it was restrained from treating the non-payment of interest/principal as a default.

“However, CARE was seeking legal assistance on possible course of action available to it in view of the NCLT order and had filed an appeal in National Company Appellate Law Tribunal (NCLAT, New Delhi) for a stay on the NCLT order dated December 30, 2020,” the agency said.

Telecom Regulatory Authority of India (TRAI) on Friday released a list of 40 “defaulter” principal entities, including large banks such as HDFC Bank, SBI and ICICI Bank, that are not fulfilling the regulatory norms on bulk commercial messages despite repeated reminders.

Hardening its stance on the issue, TRAI warned that defaulting entities should comply with the stipulated requirements by March 31, 2021 “to avoid any disruption in the communication with customers” from April 1, 2021.

“As sufficient opportunity has been given to principal entities/ telemarketers to comply with the regulatory requirements and that the consumers cannot be deprived of the benefits of the regulatory provisions any further, therefore it has been decided that from April 1, 2021, any message failing in the scrubbing process due to non-compliance of regulatory requirements will be rejected” by the system, TRAI said in a statement.

TRAI’s norms for commercial messages, based on blockchain technology, aim to curb unsolicited and fraudulent messages.

SMS scrubbing

The norms require bonafide entities sending commercial text messages to register message header and templates with telecom operators. The SMSes and OTPs, when sent by user entities (banks, payment companies and others), are checked against the templates registered on the blockchain platform — a process called SMS scrubbing.

TRAI has analysed the scrubbing data and reports submitted by the telecom service providers and also held a meeting with telemarketers/ aggregators on March 25, 2021.

“It has been informed that Principal Entities including major banks such as State Bank of India, HDFC Bank, Punjab National Bank, Axis Bank are not transmitting mandatory parameters like content template IDs, and PE IDs. even in those cases where content templates have been registered, while sending such messages to telecom service providers for delivery,” TRAI said.

The regulator, on analysing the cases of failure of messages due to scrubbing, found that various principal entities and telemarketers are not fulfilling regulatory requirements.

In the absence of these necessary parameters, the messages are bound to be rejected by the system during the scrubbing process.

TRAI has released a list of 40 “defaulter” principal entities which includes large banks like Bank of Baroda, Bank of India, ICICI Bank, and big names like Reliance Retail Ltd, and Samsung India Electronics Pvt Ltd.

Others in the list include Life Insurance Corporation of India and National Stock Exchange of India Ltd.

Separately, TRAI has also issued a list of 40 “defaulter telemarketers”.

“Sufficient time has already been given to the Principal Entities/ telemarketers and other entities to comply with the regulatory framework. However, it appears that few entities are not only indifferent but also not serious enough in complying with the provisions of the regulations thereby causing inconvenience to customers,” the TRAI statement said.

This “should not and cannot” be allowed to continue, it asserted.

Enforcement of TRAI regulations is vital as delivery of non compliant messages allows fraudulent miscreants to conveniently misuse the message delivery system for cheating and defrauding customers, it contended.

TRAI said entities involved in sending out bulk commercial messages should fulfil regulatory requirements.

Our Bureau

The Reserve Bank of India (RBI) has extended the validity period of its ‘directions’ against scam-hit Punjab and Maharashtra Cooperative (PMC) Bank for a further period from April 1, 2021 to June 30, 2021, subject to review.

PMC Bank, a Multi-State Urban Cooperative Bank, was placed under all-inclusive directions by the RBI under the Banking Regulation Act 1949, with effect from close of business on September 23, 2019.

Offers from investors

The RBI, in a statement, said the cooperative bank had received binding offers from certain investors for its reconstruction, in response to the Expression of Interest (EOI) dated November 3, 2020, floated by the bank.

The RBI and PMC Bank are presently engaging with prospective investors in order to secure best possible terms for the depositors and other stakeholders while ensuring long-term viability of the reconstructed entity, the statement added.

“Given the financial condition of the PMC Bank, the process is complex and is likely to take some more time.

“In the circumstances, it is considered necessary to extend the aforesaid directions….It may be clarified that the process of reconstruction will be commenced as soon as the aforesaid objectives are achieved to the best possible extent,” the statement said.

The three investors who have shown interest in buying PMC Bank are Centrum Group-BharatPe combine, UK-based Liberty Group and Ideal Group.

PMC Bank was placed under directions by the RBI due to its poor financial position and negative net worth .

The directions were necessitated as the RBI came across a nexus between borrowers (promoters of a real estate group) and some bank officials, with the alleged fraud/ financial irregularities pegged at about ₹4,355 crore.

The EOI was floated to identify a suitable equity investor/ group of investors willing to take over management control so as to revive PMC bank and commence regular day-to-day operations.

As per the EOI, subsequent to commencement of the normal day-to-day operations, it will be open for the investor(s) to convert the bank into a Small Finance Bank by making an application to the RBI.

“The investor(s) should ideally bring in the capital required for enabling the bank to achieve the minimum required capital to risk weighted assets ratio (CRAR) of 9 per cent.

“However, the investors may explore the option of restructuring a part of deposit liabilities into capital/capital instruments,” the EoI said.

The bank may also approach DICGC for its support for payment up to ₹5 lakh (insured deposits) to depositors under the provisions of the DICGC Act, 1961, it added.

According to the EOI, PMC Bank was having total deposits of ₹10727.12 crore, total advances of ₹4472.78 crore and gross NPA (non-performing asets) of ₹3518.89 crore as on March 31, 2020.

Negative net worth

Further, the share capital of the bank is ₹292.94 crore. However, the bank registered a net loss of ₹6,835 crore during 2019-20 and has a negative net worth of ₹5,850.61 crore, as per the EOI.

Karnataka Bank and IIFL Securities have introduced ‘KBLSmart Trade’, a facility in which all customers of Karnataka Bank can access IIFL Securities demat and trading account solution for their capital market needs.

A press release by the bank said that ‘KBL Smart Trade’ is a two-in-one account facility, where the demat and trading account features are clubbed. It said the bank will also benefit by way of enriched customer engagement and retention resulting in augmented CASA funds to the bank.

Quoting Mahabaleshwara MS, Managing Director and Chief Executive Officer of the bank, a release said that account holders can access live prices and alerts, research and recommendations of stocks, trading tips and customisable watch list. This will create a new line of business and revenue opportunities for the bank by leveraging the core competencies of both organisations, he said.

Our Bureau

The Blockchain and Crypto Assets Council (BACC) of the Internet and Mobile Association of India (IAMAI), on Friday, welcomed the government’s move on making it mandatory for companies to disclose investments made in cryptocurrencies.

Favouring the development, BACC of IAMAI stated it’s a move in the right direction that will bring greater transparency.

“The move opens the door for all Indian companies to have crypto on their balance sheets. It is a good sign that India is moving towards more acceptance and awareness amongthe mainstream markets and regulators,” said Sohail Merchant, Chief Executive Officer, Pocketbits, a member of IAMAI’s BACC.

This would help in shaping the crypto-assets market, eventually leading to its growth, he said.

Another member of BACC, Sumit Gupta, CEO and Co-founder, CoinDCX, said: “With companies across the world adding crypto assets to their books, this is a timely initiative by the MCA. This move will bring in a lot of transparency and will act as a comfort for Indian companies which are dealing in crypto-assets and were previously confused on how to put it in their books.”