Money & Banking
Banks may also use SMERA ratings to assess loan risks: RBI

RBI said banks may use ratings of SME Rating Agency of India in addition to grades provided by other agencies, to assign risks to loans for computing capital adequacy requirements

Mumbai: The Reserve Bank of India (RBI) has said banks may use ratings of SME Rating Agency of India (SMERA), in addition to grades provided by other agencies, to assign risks to loans for the purpose of computing capital adequacy requirements, reports PTI.

 

"It has now been decided that banks may also use the ratings of the SME Rating Agency of India Ltd (SMERA) for the purpose of risk weighting their claims for capital adequacy purposes in addition to the existing five domestic credit rating agencies," the RBI said in a notification.

 

Currently, five rating agencies CARE, CRISIL, FITCH India, ICRA and Brickwork are authorised by the RBI to provide risk weight to loans.

 

Under the system, the balance sheet assets, non-funded items and other off-balance sheet exposures are assigned prescribed risk weights and banks have to maintain unimpaired minimum capital funds equivalent to the prescribed ratio on the aggregate of the risk weighted assets and other exposures.

 

The long term and short term ratings issued by these domestic credit rating agencies have been mapped to the appropriate risk weights applicable as per the Standardised Approach under the Basel II Framework, the RBI said.

 

"The rating-risk weight mapping for the long term and short term ratings assigned by SMERA will be the same as in case of other rating agencies," the notification added.

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Demarcate accounts for ASBA facility in public offers: SEBI

SEBI asked banks to ensure that for applications made under ASBA facility, the application amount should be blocked only against and in a funded deposit account and ensure that clear demarcated funds are available for ASBA applications

Mumbai: Market regulator Securities and Exchange Board of India (SEBI) has directed banks to clearly demarcate separate accounts for public offer applications, filed under the application supported by blocked amounts (ASBA) facility -- under which money remains in the investors' accounts till the time of share allotment, reports PTI.

 

SEBI said in a circular that it has noticed some banks making applications on own account using ASBA facility, without having clearly demarcated funds and that some banks are marking lien against credit limits/overdraft facility of their account holders' for ASBA applications.

 

Consequently, the regulator has asked the banks to ensure that for applications made under ASBA facility, the application amount should be blocked only against and in a funded deposit account and ensure that clear demarcated funds are available for ASBA applications.

 

SEBI also said "such account shall be used solely for the purpose of making application in public issues and clear demarcated funds should be available in such account for ASBA application."

 

The new directions would come into force with immediate effect.

 

The regulator had introduced ASBA facility for public offers first in September 2008, when retail investors were allowed to invest through this facility. The move avoids the investors' money getting blocked between the time of bidding for shares and final allotment.

 

Under ASBA mechanism, investors can bid for shares while the money remains in his/her bank account and gets debited only after allotment of the shares.

 

The facility eliminates any delays related to refunds for the unallotted shares. Initially, the facility was offered to retail investors only and was given to other investors in 2009.

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SEBI revokes ban on 317 entities in Alka Securities matter

Based on the preliminary findings in 2009 SEBI had barred 317 second-level entities identified in the interim order as used as conduits by Alka Securities, its promoters and other related entities

 
Mumbai: Market regulator Securities and Exchange Board of India (SEBI) has revoked its ban on 317 entities, earlier alleged to have been used by promoter and related entities of Alka Securities for involvement in circular trading, and allowed them to deal in the company's shares, reports PTI.
 
The case relates to a probe by SEBI into a spurt in the price and volume in the shares of Alka Securities Ltd (ASL) during the period of November 2008 to March 2009.
 
Based on the preliminary findings, SEBI had identified nine promoter level entities to have allegedly indulged in price manipulation, as also 42 other entities directly and 317 indirectly being part of the stock manipulation practices.
 
Consequently, SEBI passed an interim order against these entities in 2009, barring them from dealing in ASL shares.
 
SEBI said the completion of its investigation into the matter shows that the said 317 second-level entities identified in the interim order were used as conduits by ASL, its promoters and other related entities.
 
No further action, however, has been contemplated as against these entities pursuant to the investigation and therefore the interim directions issued by SEBI need not be continued, the regulator said in its final order dated 10 September 2012.
 
Accordingly, SEBI has decided to "revoke the interim directions issued vide ad interim ex-parte order dated 28 July 2009 (against the said 317 ) with immediate effect," the order said.
 
SEBI probe had found that ASL promoters had used off-market route to transfer shares to 42 first-level entities and these entities in turn dealt transferred them to other 317 'second-level' entities.
 
Further, the company, its promoters and directors were charged to have failed to provide mandatory disclosure for change in their shareholdings on various occasions. The shareholding disclosures made to BSE were incorrect and apparently false.
 

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