Govt decides to make RBI governor head of FSDC sub-committee

New Delhi: In a step towards addressing the central bank's concern about the autonomy of regulators, the government has said that the Reserve Bank of India (RBI) governor will head a sub-committee of the Financial Stability and Development Council (FSDC). The Council will be headed by the finance minister, reports PTI.

This was announced in a statement from the finance ministry today after finance minister Pranab Mukherjee met with the regulators, including RBI governor Dr D Subbarao and Securities and Exchange Board of India chairman C B Bhave to work out the details of the framework for FSDC. J Hari Narayan, chairman of the Insurance Regulatory and Development Authority, Yogesh Agarwal, chairman of the Pension Fund and Regulatory Development Authority, and Ashok Chawla, finance secretary also attended the meeting.

Asked when the Council would be formalised, Mr Mukherjee said that an announcement would be made shortly.

The decision to make the RBI governor the head of the sub-committee to deal with inter-regulatory issues comes after the apex bank had expressed apprehension over possible breach of autonomy of the regulators in the working of the council.

Dr Subbarao had said that the central bank's role was larger than that of containing inflation, indicating that its task was also to maintain financial stability for which FSDC was being set up.

The finance ministry's statement issued after the regulators' meeting with Mr Mukherjee, said that without prejudice to the autonomy of regulators the council would engage in macro prudential supervision of the economy, including the functioning of large financial conglomerates and address inter-regulatory co-ordination issues. "It was agreed that with a view to strengthen and institutionalise the mechanism for maintaining financial stability and development, the central government would set up the apex council (FSDC)," it stated.

Asked for his opinion on the meeting, Dr Subbarao said, "We gave our suggestions." Mr Bhave, Mr Hari Narayan and Mr Agarwal chose not to comment.


Government fixes Coal India IPO price band at Rs225-Rs245 apiece

New Delhi: The government today fixed the price band of Coal India Ltd's (CIL) initial public offer (IPO), billed as country's largest, at Rs225 to Rs245 a share - a range which could help it raise over Rs15,000 crore if the next week's public offer is subscribed fully.

The decision was taken by a ministerial panel, headed by finance minister Pranab Mukherjee.

"Coal India IPO price band has been fixed at Rs225-Rs245 a share. We expect to raise over Rs15,000 crore from the issue," Coal minister Sriprakash Jaiswal told reporters after the meeting of an Empowered Group of Ministers (EGoM).

The government is diluting 10% stake in CIL through the public offer. At present, the government owns a 100% stake in the company.

The coal behemoth will offer 631,636,440 shares with a face value of Rs10 each and will offer 5% discount to retail investors and it's employees over the issue price.

"There is a 5% discount in the IPO for retail investors and 5% for our employees," Mr Jaiswal said.

Sources said the EGoM fixed the price band at Rs225-Rs245 a share to garner maximum from the four-day initial public offering (IPO), billed as the biggest ever to hit the Indian capital market on 18th October.

The four-member EGoM includes home minister P Chidambaram, coal minister Sriprakash Jaiswal and Planning Commission secretary Sudha Pillai.

Among other factors, EGoM considered the share prices of major global coal companies including China Shenhua Energy Company, the world's most valuable coal producer, to arrive at a figure, sources added.

Citigroup Global Markets India, Deutsche Equities (India) Private, DSP Merrill Lynch, Enam Securities, Kotak Mahindra Capital and Morgan Stanley are the book-running lead managers.

CIL filed the prospectus (Red Herring Prospectus) for the issue with the Securities and Exchange Board of India (SEBI), after being cleared by the Registrar of Companies, in the last week of September. Its board cleared the revised papers incorporating 78 changes suggested by the market regulator.

CIL is the world's largest coal producer and accounts for over 80% of the domestic production. In 2009-10, the country produced about 532 million tonnes of coal and CIL's contribution was 431 MT.

With over 63 billion tonnes of coal reserves under its fold, CIL is targeting an output of 461.5 million tonnes in the current financial year.

The biggest IPO in India till date is that of Anil Ambani Group company Reliance Power. In January, 2008, it raised Rs11,500 crore.


New public offerings can absorb 'huge' FII inflows: SEBI

New Delhi: Amid diverse views over the huge capital inflows into equity markets from FIIs, Securities and Exchange Board of India (SEBI) today said that numerous public offers coming to the market could absorb that money and act as a balancing factor, reports PTI.

If the inflows from foreign institutional investors (FIIs) chase same numbers of papers then obviously prices will rise, but issuance of new papers could absorb that, SEBI chairman CB Bhave told reporters here.

"I am not saying whether FII inflows are a concern or not ...I am saying balancing factor is issuance of papers," Mr Bhave said.

Fund flow from overseas investors has crossed the record Rs99,700 crore ($21.6 billion) mark this year and is all set to breach the magical Rs1,00,000 crore mark - for the first time since they were allowed invest here.

State-run Coal India Ltd's (CIL) mega initial public offering, through which the government aims to garner up to Rs15,000 crore, opens next week. Some other big private as well as PSU public offerings are also in the pipeline.

On the issue of any need to curb the whopping capital inflows, Mr Bhave said that it was for the government and Reserve Bank of India (RBI) to monitor the situation.

"Capital inflows is something which government and RBI look at," he added.

The whopping capital inflows have raised an alarm among regulators.

The sharp rise in FII flows into Indian stocks has pushed up the market. The BSE benchmark Sensex climbed over 10% in September, a month when the index re-gained the magical 20,000 level after a gap of 32 months.


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