Economy
Ordinance approved for amendments to Arbitration and Conciliation Act

This less politically contentious change could help get quicker decisions and improve the entire arbitration process

 

With all political and public focus on the ordinance for the changes to the Land Acquisition Act, another ordinance has slipped by relatively unnoticed. The cabinet approved an ordinance to amend the Arbitration and Conciliation Act yesterday.
 
The ordinance has been sent to the President and will come into force once it gains assent from President Pranab Mukherjee.
 
The changes in the Act will make it mandatory for the Presiding Judge/ officer to clear the case within 9 months. This is aimed at encouraging foreign investors to come into India and trust the focus of the administration on speedy disposal of disputes.
 
The Act still has a provision for an extension for the settlement proceedings but the High Court will have the choice to allow or disallow such an extension.
 
As the recent past shows, many high-profile cases like the Vodafone transfer pricing case and the Reliance gas pricing case decided to avail of arbitration. Considering the large volume of cases that involve such disputes, this comes as a welcome sign.
 

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MF Utilities: Will the transaction platform ever be launched? And who will benefit?

The MF Utility platform, which has been facing several delays, is now expected to be launched in May 2015

 

The Association of Mutual Funds in India (AMFI) has perhaps spent crores of rupees to build a MF Utility, a comprehensive mutual fund platform to buy and sell mutual funds. The platform was expected to be launched in June 2014. It has suffered further delays and is now expected to be launched in May 2015. Surprisingly, the platform which was conceptualised in 2011, has taken more than three years to be launched. The market regulator, Securities and Exchange Board of India, recently gave its approval, and yet, it may take another six months before the platform is opened up to investors. If this is meant to be a mere order routing platform, what seems to be causing such immense delays?
 
The platform, which is currently co-owned by 25 fund houses, is expected to help advisors cut down their operational costs. The MF Utility platform is now enrolling only distributors. According to this media report, close to 550 distributors from 140 cities have signed up for the platform.
 
Earlier fund houses seemed to be divided on the need for this platform and to put in additional capital for it. AMFI has been able to rope in just 25 out of the 44 fund houses in business. Canara Robeco Mutual Fund, HSBC Mutual Fund etc. have chosen not to participate. Despite this, with all the major fund houses on board, there still seems to be issues surrounding the launch.
 
The platform is expected to be launched in two phases— first phase for distributors and the second for investors. The only benefit provided by this platform is that investors and distributors can have a consolidated platform for mutual funds. Hence, they would not need to visit the respective registrar and transfer agent (R&TA) of each mutual fund. However, this would be of little additional benefit, as the two major R&TA’s—CAMS and Karvy cover 95% of the industry. 
 
In fact, there already exists a platform for mutual fund distributors, namely Finnet jointly developed by two registrars and transfer agents—Computer Age Management Services (CAMS) and Karvy. This platform covers almost 95% of the industry’s schemes and products. If AMFI’s idea of using technology is to improve ‘distribution’, it clearly missed the point.
 
There are already different ways one can buy funds online. Most of the serious fund houses have their own portal for transacting online, since the creation of the direct plan route. Another way is through the stock exchange platform.
 
The MF Utilities website mentions that one of the most useful features of this system is that “investors can invest through a single cheque if they wish to invest in multiple funds.” How many investors who would benefit from such a feature is not known.
According to AMFI, investors will now have a single login ID instead of multiple, providing unified access to all AMCs. Any investor can now access any scheme online either directly or through a distributor.
 
In an earlier article, we pointed out that this platform may favour tech-savvy investors, but unfortunately, today investors still need to be persuaded to invest in equity mutual funds. The MF Utility will be a “Do-It-Yourself” model which has low chance of succeeding in financial services because transaction is only the last link in a long chain of decisions. Investors tend to drop off fairly early in the chain.

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COMMENTS

Dinesh Pandita

2 years ago

As far as i have understood from the Multi utility Website, this platform also enables yout to switch within the AMC's, If i have a scheme of DSP i can switch to a schme of HDFC directly. I need not to first redeem and then issue a new cheque.

Vikas

2 years ago

I think more information needs to be sought by the ML team before posting an article like that.

Narendra Doshi

2 years ago

WHEN SOMETHING has worked for almost about 3-4 years, 95% time for 95% issues, it is better to improvise the same rather than going for a new one in trying to solve almost 99-100% issues.
I think the contents are appealing

Nilesh KAMERKAR

2 years ago

Nothing can beat the 'where to sign' platform of investing in Mutual Funds

Most convenient way to invest in MFs is by asking the agent . . . where to sign?

HC directs Costal Authority to clear projects in Bhuleshwar, Bandra Reclamation Bays

Declaring Bhuleshwar and Bandra Reclamation in Mumbai as ‘Bays’, the HC directed Costal Zone Authority to give clearances to two projects that were outside the CRZ norms for bays

 

The Bombay High Court, while accepting the certificate issued by Institute of Remote Sensing (IRS) for deciding upon the Costal Regulation Zone (CRZ) norms, asked the authority to provide clearances for two projects, one in Bhuleshwar and the other in Bandra Reclamation.

 

A division bench of Chief Justice Mohit Shah and Justice BP Colabawalla, while declaring sections of Bandra Reclamation and Bhuleshwar as ‘Bays’, directed the Maharashtra Coastal Zone Management Authority (MCZMA) to give necessary clearances within six weeks, for constructing projects in those areas. The petition was filed by two developers - Marine Drive Hospitality & Realty (representing the Bhuleshwar project) and Om Metals Consortium (for the Bandra Reclamation project).

 

The MCZMA had refused to grant clearances to these two projects on the basis that they breached CRZ norms, which restricts construction activity 500 metres from the high tide line. However, there are different Regulations that govern Bays, according to which restrictions are only applicable to a zone 100m from the high tide line. (This regulation applies to all “tidal influence water bodies” including “bays, estuaries, rivers, creeks, backwaters, lagoons, ponds connected to the sea or creeks and the like”.)

 

The HC accepted a certificate issued by Chennai-based IRS, according to which the concerned areas were not under the CRZ.

 

The MCZMA defended its stance by stating that the clearance for an earlier project near Mahim Bay was based on the fact that the certification from IRS received by those developers clearly specified that the area concerned was under a specific subsection of the CRZ norms – CRZ IVA, unlike the current cases.

 

The Bench, judgement said, “There is no substance in the contention being raised by MCZMA.... the Institute of Remote Sensing, has clearly certified that the project site falls outside 100 metres. Once this position is not disputed, it is of no consequence whether in petitioners' case the Institute of Remote Sensing has classified the water body as CRZ IVA.”

 

“The IRS was basically concerned with determining whether the water body at Mahim/Back Bay was indeed a 'bay' and if so, demarcation of the high-tide-line and area of 100 meters there from, which could be identified as CRZ area.” the decision reads.

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