The Reserve Bank of India released the Guidelines for Licensing of New Banks in the Private Sector on its website on February 22, 2013. Following the issue of the guidelines, RBI issued a press release on March 7, 2013 inviting queries from intending applicants seeking clarifications on the guidelines and also stated that considering that the clarifications provided would be of wider interest and use for all intending applicants, the Reserve Bank would post the clarifications on its website.
In all, RBI has received 443 queries from 34 individuals/ organisations. Upto the end of March 31, 2013, RBI had received 71 queries from 9 individuals/ organisations. As many as 330 queries from 19 individuals/ organisations were received between 5th to 10th April, 2013, of which 240 queries from 10 individuals/ organisations were received on April 10, 2013, i.e. on the last date. Further, 42 queries were received after April 10, 2013. The clarifications to all the queries have been provided. A few queries have been clubbed with other related queries for the sake of clarity and continuity.
A good number of queries have brought out issues relating to the provisions in the guidelines on the eligible promoters, ‘fit and proper’ criteria, corporate structure of the Non-Operative Financial Holding Company (NOFHC), foreign shareholding and on transition time to the new structure. While interpreting the replies, it must be kept in view that though the replies are specific to the questions, these must be seen in the wider context of the guidelines. Read More
Foreign investors have raised their shareholding in BSE 500 stocks to the highest level in the last five years during the quarter ended March 31.
Foreign institutional investors, or FIIs, have raised their shareholding in the BSE 500 companies that make up nearly 93% of the total market capitalisation on BSE and all 20 major industries of the economy
According to the quarterly analysis on BSE 500 companies shareholdings for the quarter ended March – 2013 by Emkay Research, FIIs holding in BSE500 companies rose to 22.2%, the highest in at least 21 quarters during quarter ended March 13.
FIIs bought shares worth $10.2 billion whereas mutual fund and bank finance and insurance (BFI) were sellers to the tune of $1.4 billion and $5 billion respectively during the quarter ended March 2013. Read More
In an over six-year old insider trading case involving shares of Reliance Industries’ erstwhile subsidiary IPCL, market regulator Sebi today imposed a penalty of Rs 11 crore on Reliance Petroinvestments Ltd.
Pronouncing Reliance Petroinvestments Ltd (RPIL) guilty of violating the insider trading regulations with regard to its dealings in shares of Indian Petrochemicals Corp Ltd (IPCL) in early 2007, Sebi said that RPIL made profits of over Rs 3.82 crore through these trades. Read More
A total of 190 companies, including 14 PSUs, are yet to meet Sebi-prescribed minimum public shareholding norms, for which they need to sell shares worth an estimated Rs 30,000 crore.
Sebi has also initiated consultations with non-compliant companies to resolve all outstanding issues for ensuring adherence to this requirement, which entails achieving a minimum 10 % public holding in PSUs by August 31 and at least 25 % in non-PSUs by June 30, 2013.
Providing compliance status of listed firms to the Minimum Public Shareholding (MPS) requirement, Corporate Affairs Minister Sachin Pilot today informed Lok Sabha in a written reply that shares worth about Rs 29,650 crore, as per valuation on December 31, 2012, need to be divested to meet these norms.
“In order to bring out a plan of action and to resolve all outstanding issues for ensuring adherence to MPS requirement for non-PSU companies, Sebi (Securities and Exchange Board of India) has initiated consultation process with the representatives of companies that are not meeting the MPS requirement,” Pilot said. Read More
(i) Eligible Promoters: Entities / groups in the private sector, entities in public sector and Non-Banking Financial Companies (NBFCs) shall be eligible to set up a bank through a wholly-owned Non-Operative Financial Holding Company (NOFHC).
(ii) ‘Fit and Proper’ criteria: Entities / groups should have a past record of sound credentials and integrity, be financially sound with a successful track record of 10 years. For this purpose, RBI may seek feedback from other regulators and enforcement and investigative agencies.
(iii) Corporate structure of the NOFHC: The NOFHC shall be wholly owned by the Promoter / Promoter Group. The NOFHC shall hold the bank as well as all the other financial services entities of the group.
(iv) Minimum voting equity capital requirements for banks and shareholding by NOFHC: The initial minimum paid-up voting equity capital for a bank shall be `5 billion. The NOFHC shall initially hold a minimum of 40 per cent of the paid-up voting equity capital of the bank which shall be locked in for a period of five years and which shall be brought down to 15 per cent within 12 years. The bank shall get its shares listed on the stock exchanges within three years of the commencement of business by the bank.
(v) Regulatory framework: The bank will be governed by the provisions of the relevant Acts, relevant Statutes and the Directives, Prudential regulations and other Guidelines/Instructions issued by RBI and other regulators. The NOFHC shall be registered as a non-banking finance company (NBFC) with the RBI and will be governed by a separate set of directions issued by RBI. Read More
Foreign institutional investors have pared their stake to a three-year low in UB Group firm United Spirits, which is currently awaiting regulatory nod for sale of a majority stake to global liquor giant Diageo.
As per the latest shareholding pattern data of the company, FIIs held 45.81 per cent stake in Vijay Mallya-led UB group firm United Spirits Ltd (USL) as on December 31, 2012.
This is the lowest FII holding in the company since 34.99 per cent over three years ago on September 30, 2009.
Besides, the FIIs’ ownership in the company has been on a declining trend for four consecutive quarters now – falling from a high of about 53 per cent at the end of 2011.
On the other hand, the domestic institutions have upped their stake considerably in the past one year from 2.51 per cent at the end of 2011. In the past quarter alone, domestic institutional investors raised their stake from 4.94 per cent to 6.21 per cent. Read More
The Reserve Bank should give preference to the non-corporate sector for new bank licences, Prime Minister’s Economic Advisory Council ChairmanC Rangarajan said.
“It is possible for the Reserve Bank to start with initially non-corporate business and find out whether there are suitable applicants and thereafter proceed to look at the other applicants,” he said in an interview.
The RBI is in the process of finalising the guidelines for giving new bank licences after Parliament approved Banking Laws (Amendment) Bill last month.
The central bank, Rangarajan said, “should look at various types of financial institutions that are available currently and decide”.
“…. many of the strong private sector banks today have been at one time or other in the financial system. They can look at it first and look at the other later on,” he said. Read More
The Reserve Bank has extended the date for implementation of Basel III, the global capital norms for banks, by three months to April 1.
“The Reserve Bank of India has rescheduled the start date for implementation of Basel III to April 1, 2013 from January 1, 2013,” the central bank said.
RBI, however, did not provide reasons behind the rescheduling.
The move, experts said, will provide additional time to some banks that need to enhance their capital base in line with the new norms for strengthening the resilience of the global banking system. Read More
The government today said Indian banks will require capital to the tune of Rs 5 lakh crore by March, 2018.
“…the broad level estimates of RBI, based on the data obtained from banks, suggest that by March 31, 2018 the total regulatory capital requirements of Indian banks would be to the tune of Rs 5 trillion; of which non-equity capital will be of the order of Rs 3.25 trillion while equity capital will be order of Rs 1.75 trillion,” Minister of State for Finance Namo Narain Meena said in a written reply in the Rajya Sabha.
The broad level estimates also suggests that government’s contribution to the equity capital of the public sector banks (PSBs) would be of the order of Rs 900 billion (Rs 90,000 crore) at the existing level of shareholding of the government in the individual PSBs, he said.
“These projections are based on the assumption of uniform growth in Risk Weighted Assets of 20 per cent per annum individually for all banks and individual bank’s assessment of internal accruals (in the range of 1-1.2 per cent of Risk Weighted Assets),” he said. Read More