Regulations
Highlights of proposed Insolvency and Bankruptcy Code

It proposes Insolvency Regulator to exercise regulatory oversight over insolvency professionals, insolvency professional agencies and informational utilities

 

Highlights of the bill for an Insolvency and Bankruptcy Code that was introduced in the Lok Sabha, the lower house of parliament, by Finance Minister Arun Jaitley on Monday:
 
- Consolidates into a single law a host of legislations that deal with the subject;
 
- Aims to speedily adjudicate such cases for higher recovery of debt and money;
 
- Allows operational creditors like employees to also call for insolvency resolution;
 
- Proposes Insolvency Regulator to exercise regulatory oversight over insolvency professionals, insolvency professional agencies and informational utilities;
 
- Moots two separate Insolvency Adjudicators -- one with jurisdiction over companies and the other over insolvency and bankruptcy resolution of individuals;
 
- Proposes to regulate insolvency professionals and insolvency professional agencies, under regulator's oversight;
 
- Proposes fast-tracking resolution of insolvency cases and improve recoveries of amount lent to companies within a timeline of 180 days, extendable by another 90 days;
 
- Proposes insolvency resolution process for individuals where the creditors and the debtor will engage in negotiations to arrive at an agreeable repayment plan of debts;
 
- Moots "Fresh Start" process for indigent individuals with income and assets lesser than specified thresholds; and
 
- Proposes insolvency information utilities which would collate, authenticate and disseminate financial information from listed companies and creditors of companies.
 
Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.
 

User

Nifty, Sensex will push higher – Monday closing report
While the uptrend is intact, Nifty may meet with resistance at around 7,880
 
We had mentioned in Friday’s weekly report that Nifty, Sensex may head higher and that as long as the Nifty stays above 7,650, the uptrend may continue. The major indices in the Indian stock exchanges rose today despite the fact that the US market plunged deeply in the red on Friday after giving up all the gains, following the rate hike. The trends in the major indices during Monday’s trading are given in the table below:
 
 
The bellwether indices of the Indian equity markets opened on a weak note in sync with their Asian peers and last Friday's slump. However, both the indices soon rose. Finance Minister Arun Jaitley on Monday tabled in the Lok Sabha the Insolvency and Bankruptcy Bill, 2015, proposing to enact a single bankruptcy code setting deadlines for processing insolvency cases. Jaitley had announced this on Saturday, saying the government intends to bring important legislative measures on structural reforms during the remaining three days left of parliament's winter session, notwithstanding the setback on the GST Bill. The proposed law aims to reduce delays in resolution of insolvency cases and improve recoveries of amount lent to companies. The draft bill has proposed a timeline of 180 days, extendable by another 90 days, to resolve cases of bankruptcy. The new bankruptcy code will help India in the World Bank's Ease of Doing Business ranking.
 
The Indian central bank's new guidelines for calculating tenor-based lending rates, effective from April 1, 2016, will reduce pressure on the mortgage lender's net interest margin, global credit rating agency Moody's has said. In an article "Reserve Bank of India Eases Banks' Final Lending Rate Requirements, a Credit Positive" the agency said: "The new guidelines will reduce pressure on the banks' net interest margins (NIMs), a credit positive. Under the finalised guidelines, banks will gradually adopt the marginal cost of funds lending rate (MCLR) to price their loans." On December 17 this year, the Reserve Bank of India (RBI) issued guidelines for calculation of lending rates by banks adopting the marginal cost of funds lending rate (MCLR) while pricing their loans. The guidelines apply for the loans starting next fiscal and will be tenor-based benchmark rate instead of a single base rate. The components of MCLR are the marginal cost of funds, negative carry on the cash reserve ratio, operating costs and tenor premium. Indian banks currently set their base rates on either their average cost of funds, or marginal cost of funds. However, because the marginal cost of funds would result in a lower cost of funds amid declining policy rates, banks have not used it, Moody's said. "The RBI lowered policy rates by 125 basis points year-to-date while banks have reduced their base rates much less. The RBI expects the shift towards the MCLR calculation to result in lower lending rates for borrowers," the article states. The tenor-based lending rates will enable banks to price their loans more efficiently based on their funding composition and strategies, Moody's said.
 
Even as market regulator SEBI was being questioned over the introduction of new IPO application norms, the abridged form norm has turned out to be a damp squib as the ten-page form has become a 16-page set -- apart from leading to further complications rather than solving any. The Securities and Exchange Board of India (SEBI) has issued a notification introducing a 10-page format -- five sheets, printed on both sides -- replacing the 48-page version of the prospectus, to be issued with IPO application forms. The new format came into effect on December 1. A look at the application forms of recent IPOs by Narayana Hrudayalaya, Alkem Laboratories and Path Labs shows that the companies have actually come out with 16-page forms instead of 10.
 
In an irony of sorts, foreign players have begun cashing out in a big way from the Indian mutual fund industry when its total asset base is fast nearing Rs15-lakh crore mark and fund houses are upbeat about future growth prospects with retail investors joining the party. As the year 2015 draws to a close, data shows that total Asset Under Management (AUM) of the mutual fund industry crossed Rs13.5 lakh crore mark for the first time, while more than 50 lakh new investor accounts have been added this year. The performance stands out even better when seen in the context of the equities market not performing so well.
 
Shares of Sun Pharma slumped over 7% intraday on Monday as investors grow cautious about a warning letter for its Halol manufacturing unit. The drug major has received a warning letter from the USFDA over violation of manufacturing norms in its facility at Halol in Gujarat. The warning letter follows inspection of the facility in September 2014 by US Food and Drug Administration (USFDA) inspectors. Shares of Sun Pharma closed at Rs754.45, down 4.55% on the BSE.
 
The top gainers and top losers of the major indices are given in the table below:
 
 
The closing values of the major Asian indices are given in the table below:
 
 
 

User

Active citizens, keeping tabs on the government, will lead to improved governance

People can now cite the Supreme Court order and Central Information Commission (CIC) orders to demand information from the Reserve Bank, says Shailesh Gandhi

 

Mumbai’s activists, NGOs, lawyers and concerned citizens cutting across diverse areas of interest and specialization met on 20th September to felicitate Right to Information (RTI) activist and former central information commissioner (CIC) on a landmark judgement of the Supreme Court of India. 
 
The Supreme Court (SC), hearing a set of 11 transferred cases, had said that the Reserve Bank of India (RBI) cannot withhold information citing 'fiduciary relations' under the Right to Information (RTI) Act.  The apex court also said, the Central Information Commission (CIC) has considered elaborately the information sought for and passed orders which in its opinion do not suffer from any error of law, irrationality or arbitrariness. Significantly, as many as 10 of these 11 orders, were issued by Mr Shailesh Gandhi, in his capacity as CIC. He is one of the only two activists who had been appointed a central information commissioner. 
 
The SC Division Bench of Justice MY Eqbal and Justice C Nagappan also made some hard hitting observations about banks the RBI. It said, "From the past we have also come across financial institutions which have tried to defraud the public. These acts are neither in the best interests of the Country nor in the interests of citizens. To our surprise, the RBI as a Watch Dog should have been more dedicated towards disclosing information to the general public under the Right to Information Act. We also understand that the RBI cannot be put in a fix, by making it accountable to every action taken by it. However, in the instant case the RBI is accountable and as such it has to provide information to the information seekers under Section 10(1) of the RTI Act."
 

Speaking at the felicitation held at Moneylife Foundation’s knowledge centre on the significance of the order, Mr Gandhi said that RTI activists can, henceforth cite the CIC orders and the SC judgment in their appeals, if denied information by RBI and other central institutions. The SC, he pointed out had extensively dealt with the two major grounds on which request for information are denied under sec 8(1) (a) of the RTI act – fiduciary relationship and economic interest. A third ground for denial of information, especially by the RBI, has been that pending investigations could be impeded – under Sec. 8 (2). 
 
Mr Gandhi went on to outline some of the key issues that he is pursuing these days as a part of his activism. The first is computerisation of government records and putting them in the public domain. This is the simplest way to ensure transparency and reducing corruption in decision-making. The second is a book on RTI, the third is quicker delivery of justice through the legal system and the fourth is to reclaim open spaces for citizens. 
 
On the issue of Open Spaces, Mr Gandhi pointed out that the Mumbai municipal corporation has proposed an ‘adoption policy’ for the open spaces under its control, which will allow various bodies to take possession of open plots and maintain them. He pointed out that several spaces, which were given earlier under such a scheme, have been usurped by private parties. This leads to the creation of private interests on public lands.
 
According to Mr Gandhi, the municipal corporation seems to treat open spaces as orphan lands despite having the resources to maintain them. This corrupt idea to allow ‘adoption’ of land needs to be opposed. The Brihanmumbai municipal corporation with an annual budget of 32000 crores has a provision of 200 crores for maintaining various grounds and gardens, which is not being utilised. 
 
“Citizens must protest if they wish to retain control of these open spaces and should take a strong position by organizing meetings and interacting with the elected representatives”, said Mr Gandhi. He asked concerned citizens to meet at least three corporators/party leaders and asking why they support a policy to alienate our Open Spaces”. Mr Gandhi has put basic details on a website along with the names and contact detail of all Mumbai corporators, while urging citizens to join in large numbers to protect out scarce open spaces.  
 
Mr Gandhi said that only active citizens, keeping tabs on the government will lead to an improvement in governance. Mr Gandhi’s talk was followed by an open discussion on what the implications of the judgment and on RTI itself. Among those who spoke on the occasion were Mr Vishwas Utagi, office bearer, the All India Bank Employees Association (AIBEA) who strongly welcomed the SC orders and was emphatic that bad loans would reduce only when the top management of banks was made more accountable. Mr Utagi mentioned how the AIBEA had defied the banking secrecy laws and started to publish the list of bank defaulters. Now that the SC judgement had thrown out the RBI’s secrecy on the grounds of ‘fiduciary’ information, he urged people to come forward to file more RTI applications and keep up the pressure on banks to be more fair and transparent in their dealings. 
 

User

COMMENTS

Mahesh Khanna

12 months ago

It is a landmark Judgment but we have to see how RBI tries to wriggle out of this situation to avoid giving information.

Bapoo Malcolm

12 months ago

Forthright, hard-hitting, honest. What we liked most was his appraisal of pending court cases. The system is Ok. Only needs to be tweaked.

Last week, at a seminar where the Chief Justice Of India spoke, the CJI also mentioned that people talk only of pending cases; not of the 2 crore cases disposed of in a year. Big country, many litigants. As an ex-CJI had said, it is heartening that people come to court to resolve disputes; not go to dons, no matter how over worked the system.

As for more judges, of course it will help. Yet, the calibre must not suffer. Another way of solving the issue is to also make lawyers responsible when frivolous litigation is filed. They need to advise clients correctly. especially for PILs and Writs. The low cost involved in meant to help the needy and poor. Not to be misused by the rich and powerful.

Heavy fines should be imposed on plaintiffs for uselessly rushing to court, especially when the case smacks of vendetta or for seeking judicial decisions to legitimise criminality.

That way half the burden will be removed. It is already being done in our Bombay High court.

REPLY

nilesh prabhu

In Reply to Bapoo Malcolm 12 months ago

Punish perjury. we lie in courts this must stop. This is bring down cases by 50 percent.


Bapoo Malcolm

In Reply to nilesh prabhu 12 months ago

A client of mine wanted to lie in court. I told him that since we were in a winning position,things would be compromised. He said the other side was lying and so would he.

I warned him that I would report it to the magistrate. He countered by reminding him that I was HIS lawyer! When I explained to him that my duty was first to the court, he discharged me.

AND did not pay me.

The problem is that people think that they MUST lie in court. I agree, judges must be more strict. The law says that perjurers must be thrown out. It needs be implemented.

Bapoo Malcolm

In Reply to nilesh prabhu 12 months ago

Have known of only one person, in recent times, jailed for perjury. A Muslim in Gujrat. Zahira Sheikh.

We are listening!

Solve the equation and enter in the Captcha field.
  Loading...
Close

To continue


Please
Sign Up or Sign In
with

Email
Close

To continue


Please
Sign Up or Sign In
with

Email

BUY NOW

The Scam
24 Year Of The Scam: The Perennial Bestseller, reads like a Thriller!
Moneylife Magazine
Fiercely independent and pro-consumer information on personal finance
Stockletters in 3 Flavours
Outstanding research that beats mutual funds year after year
MAS: Complete Online Financial Advisory
(Includes Moneylife Magazine and Lion Stockletter)