Regulations
Commodities Trading: Stock exchanges will have to wait for some more time
Erstwhile commodities regulator Forward Market Commission (FMC) was merged with Securities and Exchange Board of India (SEBI) to ensure commodities come on stock exchange platform for better regulations. However, stock exchanges will have to wait for some more time before offering commodities trading on its platform.  
 
SEBI Chairman UK Sinha, says, "We will have to wait for some time...need to ensure proper risk management to avoid any instances of misconduct, improve surveillance and put in place an enforcement mechanism for integration of markets with SEBI's surveillance system. We do not have a clearing corporation for commodities. We are moving gradually and in cautious way". He was speaking to media person in a press conference called to inform steps taken by SEBI during the past one year since FMC merger. 
 
“Immediately after taking over the regulations of the commodities markets, the markets were integrated with SEBI’s integrated surveillance system that is used for the securities market. This enhanced the vigil over the commodities markets very substantially and enabled SEBI in taking action against the instances of misconduct. Action in the case of 18 entities was also taken under Section 11B of the SEBI Act, debarring them from participating in the market as an interim measure,” Mr Sinha said.
 
Last year on 28th September, SEBI took over regulation of the commodity derivatives market post the merger of FMC with itself. At that time, SEBI had given itself three years for allowing services of a clearing corporation in commodities. However, it had asked the commodity exchanges to ensure guarantee for the settlement of trades including delivery of goods. 
 
Mr Sinha says, "Taking over the regulation of a new sector and bringing it at par with the regulation of securities market was a lengthy process, which involved Gap analyses, widespread consultation with stakeholders, amendment to various regulations, integration of trade data with our integrated surveillance system, upgrading risk management framework, improving governance system of exchanges and laying down an elaborate mechanism for investor grievances and arbitration, capacity building and necessary organisational restructuring."
 
During the year, SEBI had allowed one agri and non-agri commodity for options trading. The government has also taken the e-Agri market initiative to link spot markets for agricultural commodities across the country, which the SEBI chairman feels will also improve linkage of futures market with spot market.
 
When asked about allowing foreign institutional investors (FIIs) and foreign direct investment (FDI), Mr Sinha said, SEBI is in discussion with other regulators for allowing these institutions to operate in commodities derivatives markets. 
 
Replying to a question on ban on certain commodities, the SEBI chairman said, "We are strengthening our risk management and surveillance mechanism. We reduced position limits in agri commodities to align with existing liquidity, while cutting the daily circuit filter to 4% from 6% to reduce volatility. We put up a new risk management in place on 1 September 2016 to deal with risks in commodities markets. With such steps, I do not think, we will have to ban a commodity in future."
 
SEBI has allowed trading in options in one agri and a non-agri commodity over the past one year. The government, on recommendation of the market regulator, has notified diamond, brass, pig iron, eggs, cocoa and tea for futures trading.
 
Earlier, SEBI set up an advisory committee headed by Prof Ramesh Chand, member of NITI Aayog, to suggest ways for future development of commodities market, including improving liquidity of the market and making sure the benefits reach to all stakeholders.
 
“This committee is deliberating on the most important issues of the market such as improving hedgers participation, improving liquidity of the contracts, having objective criteria for introducing new commodities to futures trading, improving price polling mechanism and bringing new participants, institutional as well as non-institutional, to the market,” the SEBI Chairman added.
 

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COMMENTS

Mani

8 months ago

very fine

MUDRA earns net profit of Rs65.9 crore in FY2016
The Micro Units Development & Refinance Agency (MUDRA) Ltd has earned huge a net profit of Rs65.93 crore on total revenues of Rs363.95 crore for FY2016. This comes to 17.5% net margin for a business set up to help the smallest of the borrowers.
 
Speaking at the first annual general meeting (AGM), Dr Kshatrapati Shivaji, Chairman of  MUDRA, said, "MUDRA enrolled 160 Institutions-including 88 banks, including 27 public sector banks, 17 private sector banks, 31 regional rural banks (RRBs), and 13 state or urban cooperatives banks, 46 micro finance institutions (MFIs) and 26 non-banking finance companies (NBFCs) as 'partners' for refinancing against their lending to micro entrepreneurs. At the end of the year, Rs3,733.25 crore was sanctioned to 16 banks, and 25 NBFCs and MFIs, and Rs3,287.25 crore was disbursed to them."
 
Dr Shivaji made a special mention about new business initiatives; securitization by MUDRA, which is by way of investment in pass through certificates (PTCs) and extending second loss unfunded guarantee and partial guarantee for pooled bond issuances for the loan portfolio of micro enterprises. This was done to play a facilitating, as well as a direct role, in ensuring that NBFCs and MFIs providing microfinance and small business finance were able to access domestic capital markets.  Accordingly, MUDRA has invested Rs49.95 crore in one of the transaction, he added.
 
As on 31 March 2016, the net worth of MUDRA, including Rs750 crore subscribed as paid-up capital by SIDBI, was at Rs813.18 crore. Its capital to risk assets weighted ratio (CRAR) was 83.46%, primarily because of assigning zero risk weight to refinance exposures to scheduled commercial banks, as approved by Reserve Bank of India (RBI).
 
While highlighting the operations of MUDRA, Dr Shivaji said that the first year of MUDRA has been satisfactory in terms of refinance operations. 
 
In order to provide working capital facility as a cash credit arrangement, MUDRA introduced MUDRA Card, a Ru-Pay platform-based debit card.  All public-sector banks and a few private sector banks and RRBs have adopted the MUDRA Card during the year. More than 5.17 lakh MUDRA Cards have been issued for an amount of Rs1,476 crore, after launch of the Card, during the fiscal year 2015-16.
 
Dr Shivaji also informed that for effective monitoring of Pradhan Mantri Mudra Yojana (PMMY), a dedicated portal linked to MUDRA website (www. mudra.org.in) was put in place to capture weekly data on the performance of institutions under PMMY. The portal captures nation-wide district level disaggregated data by category of loan and category of borrowers viz., new entrepreneurs, women entrepreneurs, SC/ST, minority, and Mudra Card. Banks and MFIs log on to the portal to submit their weekly performance data. This data is then analysed and reported to the central government.   
 
The Pradhan Mantri Mudra Yojana (PMMY) envisages providing MUDRA loans up to Rs10 lakh, by public and private sector banks, RRBs and MFIs to income-generating micro enterprises engaged in manufacturing, and in the trading and services sectors.  From FY2016-17 onwards, activities allied to agriculture have also been made eligible under PMMY. The total sanctions and disbursements under PMMY by banks and MFIs, during FY 2015-16 aggregated to Rs1.37 lakh crore and Rs1.33 lakh crore, respectively, thereby achieving 109% of the target of Rs1.22, lakh crore for disbursement. More than 3.48 crore micro borrowers benefitted through PMMY during the year.
 

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AD Shroff: The Guardian of Liberty
On 29th September, The Forum of Free Enterprise, an organization started by one of India’s leading financial thinkers, AD Shroff way back in 1956, celebrated 60 years of its existence. The Forum started as a strong voice against the socialist poli-cies adopted by the Nehru government, which systematically stifled free enterprise. Unfortunately, the Forum’s thoughts were quickly suppressed, especially since Mr Shroff passed away soon after. Since then, Mr Nani Palkhivala and his famous budg-et speeches whose audience filled up a cricket stadium, remained the voice of the Forum. 
 
At the event to market the 60th year of the Forum of Free Enterprise yesterday, in-dustrialist Nadir Godrej recited a poem that beautifully captured the essence of the Forum and  government policies over the years, attracting repeated applause from an appreciate audience.
 
Here is what he said:
 
As India enters her seventieth year
There is indeed much to cheer.
And we could claim that we have both
Stability and steady growth.
But when we started at the gate
All we could claim was the Hindu rate.
An opportunity was lost.  
And India paid a heavy cost.
In our Republic's early days 
There is so much that we should praise.
It gives us all much elation
Our selfless leaders built a nation.
Civil discourse was maintained.
A scientific temper was regained. 
Alas! One thing we didn't see
Was a free enterprise economy.
Nehru had a socialist bent
And that's the way the economy went.
Heavy industry was prized.
Some sectors were nationalised.
The Government seized the commanding heights
Not much was left for lesser lights.
And where they were allowed to play
Impediments came in the way.
Such horrors businesses would see:
Exchange controls, MRTP,
Licensing in great detail
And limitations on your scale!
 
Tax rates that confiscated all.
The economy just hit a wall.
One man would not accept this fall
A. D. Shroff then took a call.
Surprised by these alarming trends
He roped in some good business friends
For the Forum of Free Enterprise.
Now A. D. Shroff was truly wise.
For years the lamp continued burning
And children found that they were learning
The virtues of free enterprise,
A principle that still applies
Though those with another point of view
Always fail but rise anew.
In the early days they dominated.
The forum wasn't tolerated.
 
By FICCI it was castigated.
Alas! It must be clearly stated
That business support was rather low
And businessmen went with the flow.
They chose not to criticise.
Perhaps they sought a little prize,
A license here, a permission there
They did not want to lose their share.
The Government began to frown.
There was a move to close it down. 
But thinking the Forum to be weak,
 
They thought its prospects very bleak.
A natural death was then preferred
And forcing closure was deferred.
But the Forum did find some support
And don't you think all of us ought
To lend a hand to free enterprise 
And build an economy of a good size,
Where through hard work and a little giving
All can enjoy a decent living.
The Forum's famous budget speech
Where Nani Palkhivala'd preach
The virtues of free enterprise
And castigate what was not wise.
With all the facts at his fingertips,
The audience could come to grips
With the budget's intricacies.
And never with notes, if you please.
The budget contents were often grim
But Brabourne Stadium filled to the brim.
Though policies left little scope
Our Nani still filled us with hope.
By Milton Friedman they were lauded
All their efforts should be applauded.
Professionalism was always prized
And Good Governance was advised.
Their plan for youth education 
Was such a boon for our nation.
And once or twice I participated 
And what I said then will be restated:
"In ancient times despots ruled.
And most of them were not well schooled.
And while there was free enterprise
The rulers could claim any prize
 
Since power vested at the top.
Then people slowly put a stop
To absolute, unbridled power,
No more did nobles have to cower.
They did rise up and as a starter
The King proclaimed the Magna Carta.
They then set up a parliament
And representatives were sent,
All issues were discussed at length
And gradually it gained in strength.
There came a time when all could vote
But it’s important that we note,
There were struggles, there were tears,
Democracy took years and years.
In England there was evolution
In France there was revolution.
The slogan there was Liberty,
Equality, Fraternity.
In every kind of polity
The have-nots like equality.
And often people think it’s good
To have someone like Robin Hood,
Who creeps upon the rich with stealth
And distributes unequal wealth."
Someone is there who always panders
Just have a look at Bernie Sanders!
"And this was tried, in many ways,
Long ago in the Soviet days.
It’s true disparities were small,
Although behind the Kremlin wall,
Officials lived a life of ease,
While the economy was on its knees.
 
Before we start to distribute 
Someone else must contribute.
And if you take, what people make,
They will, then feel, they have no stake.
You can be sure that they won’t try.
They won’t produce, they’d rather die.
And so, although, equality
Is a desired quality
It can’t replace our liberty.
We can’t produce, unless we’re free.
And yet, for years, we couldn’t see
That a socialist society
Could not produce the goods we needed.
If only then we had just heeded
The good advice of M. R. Pai.
And all we had to do was try
And look at it from a different prism
And thus give up on socialism.
If only we could have been wise
In trying out Free Enterprise.
The gains that now we see at last,
We could have had them in our past.
We had to await Manmohan Singh,
World Bank and IMF to bring
Reforms that helped to save the day
And demonstrate the golden way."
By protesting strongly in its day
The Forum helped to pave the way.
As reforms come at a faster pace
Our India's bound to lead the race.
The advantages we clearly see
In the Forum's Diamond Jubilee.

 

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COMMENTS

Ramesh Poapt

8 months ago

Great!

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