Securities & Exchange Board of India (Sebi) Chairman C B Bhave has for the first time publicly backed the Bimal Jalan committee report on the working of capital market infrastructure institutions (MIIs). The report was placed in the public domain on November 24 and received scathing criticism from industry players.
It is now clear that the revised takeover code and the Bimal Jalan committee report will not be implemented soon and in the same form, since the finance ministry wants to seek industry views on these two sets of recommendations this month, before the market regulator could take a decision.
The panel will include Economic Affairs Secretary Subhash Chandra Garg and RBI Deputy Governor N S Vishwanathan.
The committee was appointed by market regulator Sebi in December 2009 to review the ownership and working of capital market infrastructure institutions.
Garg had refused to sign on the report finalised by the former Reserve Bank of India governor Bimal Jalan-led committee reviewing the central bank's economic capital framework (ECF).
The Jalan panel has recommended to the RBI to keep shady entities out of banking licence race.
The report of the committee could be taken up at the next meeting of Securities and Exchange Board of India.
The ban on listing and other roadblocks on ownership have tainted the Jalan Committee report.
Bimal Jalan cmmittee's recommendations must be viewed in the context of the lessons learnt from the trans-Atlantic financial crisis and the impact that distortions and mis-governance in the financial sector can have on the real economy. The report's focus on stability of markets is, therefore, important.
'The Jalan Committee has now provided very clear guidelines on how the (RBI's) balance sheet should be looked at, what kind of disclosures should be made, what are the principles on which the Contingency Risk Buffer should be maintained, what should be the revaluation reserves, and the market risk to the Contingency Risk Buffer.'
At present, investors who can buy up to 15 per cent in a stock exchange include domestic banks and financial institutions, clearing corporations, depositories and stock exchanges.
The main difference of opinion between RBI and FinMin is over the transfer of the RBI's 'excess' capital reserves. The Jalan panel seeks to convince finance secretary Subhash Garg to soften his dissent note language. The move is aimed at maintaining the now-cordial relations between the RBI and the finance ministry.
'Only the coming years will tell whether the government finds this an easy way of relieving itself from its fiscal constraints.'
A high-level panel led by former RBI governor Bimal Jalan, set up to decide the appropriate capital reserves that the central bank should maintain, on Wednesday finalised its report.
The report contains names of entities eligible for bank licences. It was not immediately known how many applicants have been shortlisted by the high-level advisory panel.
The thinking at the Centre is that since the RBI has ramped up purchases of government bonds, the interest earned on them will be transferred to the exchequer as dividend.
The Reserve Bank on Friday set up a three-member committee under former Governor Bimal Jalan to scrutinise applications for new bank licences, which are expected to be awarded by January.
India Post had applied for a bank licence under RBI guidelines issued on February 22, 2013.
'I think today RBI supervision is much sharper than what it was earlier.'
The RBI raked in a massive net income gain from foreign exchange currency sales as a buffer for the rupee during tumultuous geopolitical upheavals last year owing to Russia's invasion of Ukraine.
The Reserve Bank on Wednesday approved a Rs 2.11 lakh crore dividend payout to the central government for 2023-24, more than double the amount it paid for the previous 2022-23 financial year. The decision was taken at the 608th meeting of the Central Board of Directors of the Reserve Bank of India held under the chairmanship of Governor Shaktikanta Das.
In an interview with Business Standard, Jalan, who has also been a member of the Rajya Sabha, speaks on a wide range of issues concerning the markets
Tells RBI this is not the time to consider such a foray, especially given the lack of funds to spare for such a venture.
It also recommended that the RBI accounting year (July-June) may be brought in sync with the fiscal year (April to March) from the financial year 2020-21 as it could reduce the need for interim dividend being paid by the central bank.
IDBI found itself in favour on reports that a parliamentary committee will meet the RBI governor to consider converting the financial institution into a universal bank.
Y Venugopal Reddy, currently executive director of International Monetary Fund will be the new Governor of Reserve Bank of India, succeeding Bimal Jalan.
While the fiscal year has just begun, any windfall surplus will be welcomed by the government as it bids to meet the fiscal deficit target of 5.9 per cent of GDP, amidst lack of clarity on exactly to what extent will recession in the West impact India's trade and tax collections.
Rules for market infrastructure institutions such as stock exchanges, clearing corporations, and depositories have come under review by Sebi after five years.
The Reserve Bank on Wednesday said it plans to issue new bank licences around January, "consistent with the highest standards of transparency and diligence."
DFS writes to departments that haven't responded to RBI's request for information.
Taking advantage of the RBI's different accounting year, the Centre had started demanding an interim dividend till the time the latter's final balance sheet is prepared (usually in August). To address this anomaly, an expert committee led by former RBI governor Bimal Jalan had recommended aligning the RBI's financial year with that of the government.
The RBI has agreed to consider the application of India Post in consultation with the government.
Owing to Finance Minister Nirmala Sitharaman being new to her role, a number of crucial announcements in the Budget bore Garg's imprint, especially the decision to borrow in overseas markets, reduce the fiscal deficit as a percentage of gross domestic product, and resort to off-Budget borrowing to meet that target, says Arup Roychoudury.
Perhaps because the Modi government had some differences of opinion with two of the economist governors (one of whom was appointed by the Manmohan Singh government), there is a view that its political leadership prefers a civil servant to head the RBI, notes A K Bhattacharya.
The Reserve Bank on Friday approved the transfer of Rs 99,122 crore as surplus to the central government for the accounting period of nine months ended March 31.
After the screening, the shortlisted candidates will be vetted by an external committee, to be headed by former RBI governor, Bimal Jalan.
The windfall from RBI may be used to trim borrowing, help fund Rs 3.3 lakh crore capex plan, capitalise banks and provide fiscal stimulus to some stressed sectors, experts and economists said.
Jayshree P Upadhyay ' Mumbai September 9, 2014 Last Updated at 22:50 IST Top Stocks to Buy in 2014 8-10 Best Stocks for 2014 per month Highly Accurate Calls, Free Trial stockaxis.com/Stocks-to-buy-in-2014 Ads by Google 3 Add to My Page RELATED NEWS Foreign investor cap in bourses may be raised Sebi sets foreign portfolio investor limit of 10% per firm Sebi move on FPI regime grounded No clarity yet on FPI regime Jaimini Bhagwati: Correcting tax and disclosure anomalies Karbonn Titanium S5 Plus Be 1st to own latest Android phone with Dual SIM, 8 MP Camera & more!www.karbonnmobiles.com/S5_Plus 1Cr Life Cover @ Rs 543* Compare Premium of 46 Insurers Buy Online and save upto 55%www.policybazaar.com/TermInsur_Rate Ads by Google In a move that could increase the stake of foreign investors in Indian stock exchanges, the government is considering a threefold increase in the single-investor investment ceiling. Currently,a foreign portfolio investor (FPI) investment in an exchange is capped at five per cent. The finance ministry has written to the regulatory authorities to increase the ceiling to 15 per cent, said sources. The proposal is said to have in-principle approval from the Securities and Exchange Board of India (Sebi) and the Reserve Bank of India (RBI). The move would bring the FPI investment limit in line with those for financial institutions such as insurance companies and banks. NEW POLICY IN THE WORKS Single foreign investor limit in exchanges to be revised from 5% to 15% Sebi and RBI have given in-principle approval to the proposal Government to amend foreign investment policy BSE has 8 foreign shareholders holding 31% stake NSE has close to 20 foreign shareholders holding 36% stake The government allowed the foreign investors to invest in stock exchanges in 2006, with an overall cap of 49 per cent. This latter cap is likely to be unchanged. BSE and the National Stock Exchange (NSE), the two large nationwide bourses, are likely to benefit from the increase in limits. BSE has eight foreign investors, which cumulatively own about 31 per cent in it. The shareholding of Deutsche Boerse Group and Singapore Exchange Ltd are a little below the five per cent ceiling. NSE has about 20 foreign shareholders, holding around 36 per cent. Cyprus' Gagil and Goldman Sachs own five per cent each; Citi Group has around two per cent. "The finance ministry has received representations stating that the present limit of five per cent is a deterrent in attracting long-term anchor and strategic foreign investors in stock exchanges. Following which, the ministry has sought comments from both Sebi and RBI," said a person privy to the matter. A higher foreign investor limit will not only encourage more investment in Indian bourses but help in exchange of technology and products, said exchange officials. "A five per cent limit on the shareholding of any single investor or investor group is too small to encourage them to take sufficient interest in growth of the exchange," said an official associated with one, asking not to be named. The regulator and the government are also mulling a change in the shareholding of clearing corporations, which could also see individual foreign investors' cap being increased to 15 per cent. Some sections of the market believe that allowing a single FPI to own 15 per cent in a exchange could be detrimental to having a diversified shareholding. The Bimal Jalan committee, in the previous review of ownership and governance of stock exchanges in 2010, had debated whether there was a need to revise the cap. It was in favour of having an anchor investor, such as a bank or financial institution, which would own up to 24 per cent. 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