Based on the recommendations of Uday Kotak committee on corporate governance (2018), the stock markets watchdog, Securities Exchange Board of India (SEBI) had asked listed companies to separate the positions of Chairperson and Managing Director (MD)/Chief Executive Officer (CEO). The requirement was mandatory. The companies were required to implement the order by April 2020. However, based on representations received from the industry, an additional two years was given for compliance. In April last year, SEBI chairman Ajay Tyagi goaded them to ensure that the April 2022 deadline is not missed. Now, that even this deadline is barely a month away, the regulator has done a volte face. On February 15, 2022, the SEBI has decided to implement the requirement on...
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Category: Regulatory environment
Banks’ bailout — Make it transparent
The proposed ‘bad bank’ scheme by the Government is merely an attempt at using taxpayers’ money for bailing out NPA-afflicted banks In the Union Budget for 2021-22, Finance Minister Nirmala Sitharaman had proposed setting up of a bad bank. Crafted as National Asset Reconstruction Company Limited (NARCL), it will bundle up all the non-performing assets (NPAs) of banks and sell them to investors such as private equity funds, alternative investment funds (AIFs) and so on, by putting a turnaround plan in place. On September 16, 2021, she announced the broad contours of the action plan. Under it, the NARCL will purchase NPAs from banks under 15:85 structure, wherein it will pay up to 15 per cent of the agreed or...
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Telecom industry – shun duopoly
In a letter addressed to the department of telecommunication (DoT), the telecom operators including the three major players viz. Airtel, Vodafone Idea or Vi and Reliance Jio have submitted a charter of demands. These include:- (i) reduce the license fee from 3% of adjusted gross revenue (AGR) to 1%, USOF (Universal Service Obligation Fund) contribution from 5% of AGR to 1%, spectrum usage charge (SUC) from 3-6% (depending on when the operator acquired spectrum in respective bands) to a uniform 3% for all operators; (ii) extend the tenure of leased spectrum to operators from 20 years to 40 years; (iii) moratorium of 7-10 years for payments (in addition to 2 years already given); (iv) reduce interest rate on all outstanding...
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NPAs – the inevitable monster
According to a statement by the Minister of State for Finance, Bhagwat K Karad in the Parliament, non-performing assets (NPAs) or bad loans of banks declined from a high of around Rs 1036,000 crore as on March 31, 2018 to Rs 896,000 crore on March 31, 2020 and further down to Rs 834,000 crore on March 31, 2021. For comparison purpose, the choice of March 31, 2018 has special significance. Under the erstwhile UPA – dispensation particularly during its second consecutive tenure 2009-2014, banks recklessly gave loans to corporate houses/businesses without assessing the viability of the projects and conducting due diligence. The ability of the concerned projects/businesses to generate required cash to service the loans was in doubt from the...
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FDI in retail: Clear the maze
The government should legitimise direct selling by foreign companies in Indian retail without any riders In the backdrop of complaints by the Confederation of All India Traders (CAIT) regarding violation of the Foreign Direct Investment (FDI) policy by global e-commerce players, Amazon and Walmart-owned-Flipkart etc, the Ministry of Consumer Affairs has proposed a set of new rules called Consumer Protection (e-commerce) Rules, 2020 which the government proposes to implement after factoring in the views of all stakeholders. The rules require all e-commerce entities that are not established in India, but intending to operate here: (i) register with the Department for Promotion of Industry and Internal Trade (DPIIT) in the Commerce Ministry; (ii) bar affiliated entities from selling on e-commerce platform...
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Banning old vehicles is retrograde: Vehicle’s fitness, not age, should be the criteria for scrapping
Instead of a vehicle’s age, let’s use fitness as the criterion for determining whether it’s allowed to ply on the roads or not Whether a vehicle is fit to run or otherwise, a lot depends on how well it is maintained, its timely upkeep; this needs to be tested instead of pronouncing it as unfit merely because it has reached a certain age. (Representative image/ File photo) ———————————————————————– On March 18, 2021, the Union minister for Road Transport and Highways, Nitin Gadkari, announced a ‘voluntary’ vehicle scrappage policy to (1) mitigate vehicular pollution and (2) more than double the turnover of Indian automobile industry from the current Rs 4.5 lakh crore to Rs 10 lakh crore in a few years....
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Banning old vehicles – a retrograde order
On March 18, 2021, Union Minister for road, transport and highways Nitin Gadkari announced a ‘voluntary’ vehicle scrappage policy to (i) mitigate vehicular pollution and (ii) more than double the turnover of Indian automobile industry from the present Rs 450,000 crore to Rs 1000,000 crore in a few years. At present, there are 5100,000 vehicles which are older than 20 years, 3400,000 vehicles more than 15 years old but < 20 years and 1700,000 > 15 years, but without renewed fitness certificate. The policy architecture is founded on two pillars viz. incentivize their scrapping and dis-incentivize hanging on to them. The owner going for scrap will get 4-6% of ex-showroom price of the new vehicle as compensation; 5% discount on...
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Person in control: New entity in charge
SEBI wants to shift focus from promoters to controlling shareholders or the so-called ‘person in control’ (PIC), but is the new breed willing to take charge? Paving the way for a major change in the way the promoters and over 4,700 listed corporates function in the country, in a consultation paper, the Securities and Exchange Board of India (SEBI) has proposed doing away with the concept of promoters and moving to ‘person in control’ (a three-year transition is recommended for the switch over). It has also suggested doing away with the current definition of promoter group with a view to rationalize the disclosure burden. The other proposals include (i) reducing the minimum lock-in period(the time period an investor can hold on...
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‘Person in control’ in lieu of ‘promoter’
Paving the way for a major change in the way the promoters and over 4,700 listed corporate function in the country, in a consultation paper, the Securities and Exchange Board of India (SEBI) has proposed doing away with the concept of promoters and moving to ‘person in control’ (a three-year transition is recommended for the switch over); It has also suggested doing away with the current definition of promoter group with a view to rationalize the disclosure burden and bring it in line with post-issue disclosure requirement. The other proposals include (i) reducing the minimum lock-in period (the time period an investor can hold on to the shares) post an initial public offer (IPO) for promoters’ share of minimum 20%...
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Make the COVID jabs free for everyone
There is a dire need to vaccinate at least one billion people within a short time and, given the pitfalls of differentiated pricing, the Centre should opt for inoculating everyone free of cost Under the ‘Liberalised Pricing and Accelerated National Covid-19 Vaccination Strategy (LPANCVS)’, announced on April 19, which was kicked off from May 1, the Centre has plans to vaccinate all adults above 18 years of age. Before this, the inoculation drive that was launched on January 16, covered healthcare and frontline workers and people above 50 years of age and those with comorbidities. In the second phase of the drive the age limit was brought down to those above 45. Vaccine manufacturers were giving all their supplies to...
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