Tag: J Sagar Associates

Breather for borrowers and small businesses as RBI allows Restructuring 2.0, BFSI News, ET BFSI

Banking & Finance

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The Reserve Bank of India has brought back the restructuring scheme for retail and small business borrowers allowing the lenders and borrower to brace the impact of the ongoing severe second wave of Covid-19 across the country.

RBI Governor, Shaktikanta Das said, “Small businesses and financial entities at the grassroot level are bearing the biggest brunt of the second wave of infections.”

He added, “The resurgence of COVID-19 pandemic in India in recent weeks and the associated containment measures adopted at local/regional levels have created new uncertainties and impacted the nascent economic revival that was taking shape. In this environment the most vulnerable category of borrowers are individual borrowers, small businesses and MSMEs.”

Under the Resolution Framework 2.0 for COVID Related Stressed Assets of Individuals, Small Businesses and MSMEs, borrowers who have aggregate exposure upto Rs 25 crore and have not availed restructuring in previous framework and who are classified as standard as of March 31, 2021 will be eligible for restructuring. The proposal has to be invoked up to September 30, 2021 and shall be implemented within 90 days after invocation.

Borrowers who have availed restructuring in the earlier framework where the resolution plan is permitted for less than two years are being permitted to use this window to modify their plans to extend the period of moratorium or tenor of the loan up to a total of 2 years.

For small businesses and MSMEs restructured earlier the central bank has allowed lending institutions as a one-time measure to review the working capital sanctioned limits based on a reassessment of working capital cycle, margins and other parameters.

Aashit Shah, Partner at J Sagar Associates said, “Restructuring guidelines for MSMEs, small businesses and individuals will assist them tide over the uncertainties caused due to the second wave. These guidelines as well as the recently introduced pre-arranged insolvency resolution process will enable MSMEs to restructure their debts without the looming fear of losing or liquidating their businesses.”

“Opening a one-time restructuring window for individuals and MSME till September 2021 will give an impetus to scale up their business without worrying about financial destitution,” said Rajesh Sharma, MD at Capri Global Capital Ltd.



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Franklin e-vote: Scrutiniser’s report raises more doubts on the process

Banking & Finance

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Raising further doubts over the ‘fairness’ of the e-voting process at Franklin Templeton Mutual Fund (FTMF), Mumbai law firm J Sagar Associates (JSA), which was appointed the ‘scrutiniser’, said it cannot vouch for the accuracy of the entire process.

JSA said in its report, seen by BusinessLine, that it relied on the voting data provided by KFin Tech, the company that provided the voting platform, and has not conducted any investigation or examination on its own into the data or the voting process.

“We have not investigated or verified the accuracy of the facts available and have not made any searches or any other independent investigation with any third party… we have not verified any information provided to us from any information which is either available in public domain or based on any other document,” JSA said in its disclosure.

Debt schemes

The e-voting was conducted during the last week of December after the Supreme Court asked FTMF to seek investor consent to wind-up the six debt schemes. While Franklin said that over 90 per cent of the votes was in favour of shutting down the schemes, several questions have been raised by the SEBI-appointed observer. Now, the disclosures by JSA have raised more doubts over the e-voting process.

On the question of possible duplication in the e-voting, the JSA report said, “The process was conducted by KFin online and J Sagar had no access to the details of the voting prior to the unlocking of the results. We will, therefore, be unable to make such a representation in the report.”

‘No technical error’

On the question of whether the e-voting was conducted without any technical glitches, JSA said, “We are not qualified to opine on the technical glitches. We understand from KFin that to the best of ‘their knowledge’ there was no technical error in the e-voting.”

KFin Tech provided the platform for e-voting and its role is already under scanner. On January 24, BusinessLine had reported that a forensic audit by the Central Forensic and Science Laboratory, which functions under the Home Ministry, disclosed that multiple votes were cast from the IP belonging to the servers of KFin Tech.

According to the Companies Act and guidelines of the Ministry of Corporate Affairs, a scrutiniser should ensure ‘fairness’ in the e-voting process.

JSA said in its report that its role was limited to the counting of votes after they were downloaded from KFin online portal.

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