Nation
Kejriwal says deeply hurt by what is going in AAP

AAP has convened a meeting of its national executive on Wednesday to decide on all issues, including the latest controversy over differences in the party

 

With the party facing escalated internecine conflict, Aam Admi Party (AAP) chief and Delhi’s Chief Minister Arvind Kejriwal on Tuesday said he was “hurt and pained” by what was going on within the outfit, terming it as an “ugly battle” which has “betrayed” the trust imposed by the people. 
 
Kejriwal, who is the party’s national convener, refused to be drawn into the “ugly battle”, saying he will concentrate on Delhi’s governance. 
 
“Deeply hurt and pained by what is going on in the party; this is betrayal of trust that Delhi posed in us,” Kejriwal said in a tweet. 
 
I am deeply hurt and pained by what is going on in the party. This is betrayal of trust that Delhi posed in us (1/2)
— Arvind Kejriwal (@ArvindKejriwal) March 3, 2015
 
“I refuse to be drawn into this ugly battle. Will concentrate on Delhi’s governance. Will not let peoples’ trust break under any circumstances,” he further said. 
 
I refuse to be drawn in this ugly battle. Will concentrate only on Delhi's governance.
— Arvind Kejriwal (@ArvindKejriwal) March 3, 2015
 
Sharp differences have come to the fore within AAP with allegations that senior AAP leaders Prashant Bhushan and Yogendra Yadav were trying to “remove” Kejriwal from the post of party convener. 
 
AAP has convened a meeting of its national executive on Wednesday to decide on all issues, including the latest controversy over differences in the party. 
 
Meanwhile, following an interview by Bhushan to a TV channel, Ashish Khetan, a key member of the AAP’s Delhi unit, accused party patron Shanti Bhushan and his son and daughter — Prashant and Shalini — of wanting to control all the wings of the party. 
“Those who are floating the ridiculous one man party theory wanted to make AAP one family party,” Khetan said on twitter. 
 
“Father son daughter trio of Shanti Prashant & Shalini (sic) wanted to have a vice—like grip on all party wings, from PAC to policy committee to National Executive,” he further said. 
 
The tweet was immediately retweeted by senior AAP leaders close to Kejriwal. 
Another party leader and its Delhi convener, Ashutosh, said Prashant Bhushan should have raised the issue of “personality cult” at the national executive meeting instead of airing it publicly. 
 
“Prashant ji should have raised issue of personality cult in NE, to be held tomorrow instead of in the media. NE should have discussed/taken a call. NE is highest decision making body/is empowered to decide on any issue/can direct anyone accordingly. Best forum to discuss/decide,” Ashutosh tweeted. 
 

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RBI not sharing bank inspection reports with intelligence agencies

In the Economic Intelligence Council meeting, the chief of CEIB reportedly said that RBI had initially agreed to share extracts of the inspection reports on banks but later on, had changed its stand

 

The Reserve Bank of India (RBI) has refused to share its reports on banks’ inspection on alleged money laundering laws and other violations with the Central Economic Intelligence Bureau (CEIB), citing legal hurdles.
 
The RBI was required to share relevant extracts of inspection reports with law enforcement agencies and CEIB, an apex intelligence agency under the Finance Ministry, to check black money and other financial crimes where gross violations of know your customer (KYC) guidelines and Prevention of Money Laundering Act (PMLA) are noticed, official sources said.
 
It had earlier given an assurance about sharing information relating to the Foreign Exchange Management Act (FEMA) violations with CEIB, which they share with the Enforcement Directorate (ED), they said.
 
But the central bank has not been sharing such information, the sources said.
 
The matter of non-sharing of inspection reports by RBI with CEIB was discussed during a recent meeting of the Economic Intelligence Council (EIC) headed by Finance Minister Arun Jaitley.
 
At the meeting, it was highlighted by the CEIB chief that while RBI had initially agreed to share the extracts of inspection reports with it, later on, they changed their stand.
 
RBI has cited “legal impediments” in sharing the reports with CEIB as it is not a statutory body; the sources said quoting the minutes of the meeting. 
 

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SEBI’s Safety Net Idea is Full of Holes
More silly tinkering with IPO rules
 
Every time the capital market regulator is under pressure to explain why retail investors shun the market, it fishes out the absurd idea of a ‘safety net’ for equity investors. Each time, the safety net has a new name. This time, The Economic Times tells us that its primary market advisory committee (PMAC) will discuss the idea of allowing investors to buy optionally fully convertible debentures (OFCDs) instead of plain vanilla equity. 
 
SEBI (Securities & Exchange Board of India), which celebrated 25 years of its existence with much fanfare in 2014, still does not seem to understand that equity, by its very nature, has to carry a price risk and cannot be converted into a debt-like instrument. Will OFCDs really work? The newspaper reports that OFCDs will have an 18-month tenure and carry bank interest rate (taxable); the money will be kept in an escrow account to meet redemption requirements should they arise. It is not clear if the conversion to equity will be in six months or at the end of 18 months. 
 
If the conversion to equity has to be in six months, who is to say that truly unscrupulous management will not keep the price high for that period? Many companies have managed to do it for significantly longer periods. A recent example would be Helios & Matheson, whose stock price continued to remain high even when it wasn’t able to pay salaries or interest on fixed deposits. 
 
Moreover, what happens if the price falls precipitously after the OFCDs are converted? Will SEBI act against the promoters or will they get away? Surely, the regulator realises that there must be a reason why various kinds of  ‘safety nets’ for equity investors have been discussed for over two decades and why they have never worked.
 
It is worth pondering what kind of companies would need to raise money under such conditions, while running the risk of numerous factors and circumstances that could impact stock price and corporate performance.
 
SEBI forgets that its job is to ensure that corporate fundamentals are in order, that facts stated in the IPO document are correct and accounts are not doctored. We, investor activists, pushed for an IPO rating on a scale of 1 to 5 to give investors a snapshot of the fundamentals. All they needed to do was to take a call on the price. But SEBI, under pressure from corporate lobbyists, ensured that IPO ratings were scrapped. What helped the case was that SEBI had deliberately weakened the effectiveness of ratings by allowing companies to choose their rating agency, instead using investor protection funds to pay for them and ensure independence.
 
Remember, it is SEBI that damaged the primary market permanently in the mid-1990s by allowing hundreds of fraudulent, fly-by-night companies to tap the capital market without any checks. A significant number of these companies vanished with investors’ money and there has been no serious effort to track them and recover funds. Many investors who suffered massive losses in the first flush of capital market liberalisation have never come back. India’s investor population has halved and this is affecting the government’s plan to disinvest shares of public sector undertakings (PSUs).
 
The answer to this situation is not an absurd safety net, but to rebuild investor confidence through sensible pricing of IPOs and more responsible investment banking. PSUs are unlikely to attract investors unless one of two things happen—the offer is at a significant discount to market price, or the government initiates steps to ensure operational autonomy of management with proper accountability and puts in place professional management selected on merit. 

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