Money & Banking
No rift with government over public debt agency: RBI
Reserve Bank of India (RBI) deputy governor S.S. Mundra on Monday said there were no differences with the government over setting up an agency for raising public debt.
 
Finance Minister Arun Jaitley had on Sunday denied any rift with RBI governor Raghuram Rajan on this issue.
 
"We have been telling there are no differences. Where is the question of sorting out," Mundra told reporters here when asked if all the differences between the government and the RBI on setting up of a Public Debt Management Agency (PDMA) have been sorted out.
 
"There is no disconnect," Jaitley had told reporters in New Delhi after addressing the Reserve Bank's board of directors on Sunday.
 
Rajan on Sunday advocated keeping the proposed public debt agency independent of the government as well as the RBI to ensure fiscal discipline.
 
"Public Debt Management Agency as a professional organisation, independent of the central bank and government, is something that is desirable," he told reporters.
 
Rajan said: "Such an independent structure puts some discipline on the government debt process and also frees regulation of the need to create some sort of financial impression".
 
The RBI currently oversees public debt management.
 
Jaitley, in his first full budget last month, proposed setting up of a PDMA with the aim of minimising the cost of raising and servicing public debt over the long term within an acceptable level of risk at all times, under the general superintendence of the central government.
 
As per the Budget 2015-16 proposal, the new agency will have a CEO and members from the government and the RBI.
 
As per the Finance Bill 2015-16, the central government will entrust the PDMA with the issue of government securities including short-term papers.
 
The agency will be responsible for making payments to holders of government securities, in accordance with the terms of such government securities, it said.
 
Lauding the move, Rajan said: "So I think as a concept and enabling that concept is a very worthwhile move."
 
The government's net borrowings through long-term bonds were pegged at Rs.453,000 crore in the current fiscal.
 
For 2015-16, the budgeted target for borrowings was Rs.600,000 crore, but the government will raise only Rs.592,000 crore from the markets.

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COMMENTS

MG Warrier

2 years ago

I do not know who started using the word ‘rift’ while referring to the difference of views between two people(in this case between GOI and RBI). Differences in approach and policy perceptions between GOI and RBI, which were issue-specific have surfaced on several occasions in the past also. GOI has a political leadership and RBI is a professionally managed statutory body functioning within the contours of its legal mandate. As RBI has the responsibility to secure monetary stability and generally to operate the currency and credit system of the country to its advantage, the central bank will continue to share its views with government which may not always in line with the stance of government which, sometimes, may be guided by political expediency. GOI will have the final say as jocularly put by Dr Y V Reddy when he was RBI Governor: “RBI has full autonomy and I have FM’s permission to say so”

SC gives Sahara 'final' chance to raise money
The Supreme Court on Monday gave Sahara a "final and last opportunity" to raise Rs.10,000 crore to make a part payment to investors for the money raised through OFCDs in 2008-09, for release of Subrata Roy and two directors from custody.
 
The apex court bench of Justice T.S.Thakur, Justice Anil R. Dave and Justice A.K. Sikri also permitted Sahara to sell some other properties within the country to raise balance amount. 
 
The court gave Sahara three months' time to complete the transaction, including exploring other options available before it.
 

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COMMENTS

ramchandran vishwanathan

2 years ago

Its really gracious of our honourable Supreme court to keep on extending the time limit. Had this been an individual defaulting his loan , by now the Bank would have gone & attached his assets.

REPLY

integrity

In Reply to ramchandran vishwanathan 2 years ago

correct

SEBI directs GSHP Realtech to refund money collected through secured non-convertible redeemable debentures

The company was engaged in fund mobilising activity through issuance of Secured Non-Convertible Redeemable Debentures, to more than 49 persons, without complying with the relevant provisions of the Companies Act,1956 and provisions of the SEBI (issue and Listing of Debt Securities) Regulations, 2008

 

SEBI passed an order on 18 March 2015, wherein GSHP Realtech Limited and its directors and promoters, have been directed to refund the money collected by the company through issuance of secured non-convertible redeemable debentures, with interest at the rate of 15% per annum at half yearly intervals and also not to access the capital market in any manner. They have also been restrained and prohibited from buying, selling or otherwise dealing in the securities market, from the date of this order till the expiry of four years from the date of completion of refunds to investors.
 
The company was engaged in fund mobilising activity through issuance of secured non-convertible redeemable debentures, to more than 49 persons, without complying with the relevant provisions of the Companies Act, 1956 and provisions of the SEBI (issue and Listing of Debt Securities) Regulations, 2008.
 
SEBI had passed an interim order on 15 May 2014 in the matter, whereby it directed the company and its promoters/directors not to collect any more money from investors through issuance of securities.
 
An opportunity of personal hearing was afforded to the company on 22 August 2014, 26 September 2014 and 11 December 2014 by SEBI. 
 
The SEBI member then pointed out, “I have considered the observations and allegations made in the SEBI Order, the submissions made by the company and other noticees who had filed replies and other material available on record. The allegation against the company and the directors is that the Company did not comply with the 'public issue' norms mandated under sections 56, 60, 73, 117B and 117C of the Companies Act, 1956 and the provisions of the ILDS Regulations in respect of its offer and issuance of NCDs. The SEBI  Order had, while considering the submissions made by the company, alleged that the company made a public issue of NCDs during the Financial Year 2012-2013 to a total of 535 persons for an amount of Rs2,63,94,200/-.”
 
The SEBI member strictly observed, “The company has not substantiated with proof that it has made offer and allotted securities to 'friends, associates and well-wishers of the company' and that it knew them before hand and made specific offers. Further, SEBI is also in receipt of numerous complaints from investors of NCDs alleging that the company has not returned their investments, which proves that the offer made by the company was not in terms of section 67(3)(a) and (b) of the Companies Act. Further, by merely contending that the allotment was on 'private placement' would necessarily mean the same and the nature of the offer and issue - whether private or public, has to be decided on the basis of the terms and conditions and conduct of the company.”
 
SEBI has insisted that the money collected by refunded, and the relevant portion of the SEBI Order says, “the natural consequence of not adhering to the norms governing the issue of securities to the public and making repayments as directed under section 73(2) of the Companies Act, 1956 is to direct the company, its former directors (who were the directors when the impugned offer and allotment of NCDs were done) and its present promoters/directors to refund the monies collected with interest to such investors.
 
Accordingly, the company and its former directors (who were the directors during the period of violations committed by the Company as found in this Order) namely
Dharampal Kumar Rawat and Sanjay Kumar Srivastava and its present directors, namely, Arun Kumar Singh, Mahesh Kumar Singh and Raj Kumar Mondal, shall be jointly and severally liable for making the refunds. Further, in view of the violations committed by the company and its former directors, to safeguard the interest of the investors who had subscribed to such NCDs issued by the company, to safeguard their investments, and also to ensure that the company does not collect any further monies pursuant to its offer of NCDs, it also becomes necessary for SEBI to issue appropriate directions against the company and the other noticees.”
 
The repayments to investors shall be effected only in cash through bank demand draft or pay order. The company and its present management are permitted to sell the assets of the company only for the sole purpose of making the refunds as directed above and deposit the proceeds in an Escrow Account opened with a nationalised bank, according to the SEBI Order.
 
To make sure that the investors come to know of the present position, the company, GSHP Realtech Limited shall issue public notice, in all editions of two National Dailies (one English and one Hindi) and in one local daily (in Bengali) with wide circulation, detailing the modalities for refund, including details of contact persons including names, addresses and contact details, within fifteen days of this Order coming into effect, said the SEBI Order.
 
Also, the SEBI Order has curtailed the debenture trustee by saying, “GSHP Welfare and Development Trust, the entity who was engaged by the company as its debenture trustee in contravention of law, shall not offer itself to be engaged as a debenture trustees or in any capacity as an intermediary in the securities market, without obtaining a certificate of registration to undertake that assignment as required under law.”
 
Finally, the SEBI Order says, “This Order is without prejudice to any action, including adjudication and prosecution proceedings that might be taken by SEBI in respect of the above violations committed by the company, its promoters, directors and other key persons.”
 

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