The Reserve Bank says that incorporating the National Disaster Management guidelines in loan policies and documentation of banks will benefit lenders and borrowers
The Reserve Bank of India (RBI) has issued a notification to all scheduled commercial banks, directing them to adopt the National Disaster Management (NDMA) guidelines and incorporate these as part of their loan policies and documentation. The guideline will apply to infrastructure projects, commercial buildings, and housing structures.
"We have examined the NDMA guidelines in consultation with the Indian Banks' Association and National Housing Bank and are of the view that adoption of the guidelines would be in the interest of lenders and borrowers," the RBI said in a statement on Thursday.
The NDMA guidelines specify that instead of depending on civic authorities and architects' certificates, banks should independently verify whether the proposed structure is stable and can endure natural hazards like landslides, floods, cyclones and earthquakes. Similar guidelines are available for redevelopment projects.
"It will help the banks to ensure disaster-resilience and safety of bank-financed assets by themselves (without relying on the techno-legal processes controlled by ULBs). By using these guidelines, the verification wings of banks and their empanelled technical experts will be in a position to check that the safety-related codes and regulations, as specified in NBC-2005 and various Indian Standards, are complied with and the designs of the proposed buildings and structures are multi-disaster-resilient," the NDMA guidelines state. The task can be also referred to (a group of) professional architect/experts with credible reputation.
Ms Alpana Kilawala, chief general manager in the RBI's department of communications, said, "Generally our guidelines are mandatory, but we don't have any deadlines. It is in the interest of the banks themselves to incorporate the NDMA guidelines. We just give them the guidelines, according to which they frame their own policies. However, if something exceptional happens, we set a deadline and later take other regulatory action." The banks are free to form their internal panel of experts, Ms Kilawala said.
The NDMA directive cites the failure of civic authorities to stop construction of unsafe buildings. Many old buildings in the metros have fallen short of the NDMA benchmarks, and have caused heavy losses in calamity-stricken areas. The RBI directive comes at a time when redevelopment of older structures is being undertaken in the major metros. Many of these structures did not comply with building safety regulations.
The transfer agent for mutual funds says ban on entry loads has not affected the trend of new folio creation, which mirrors the market
Computer Age Management Services (CAMS), a transfer agent for mutual funds, says that post the abolition of the entry load, the monthly average for new folio creation for mutual funds has improved. However, it states that the entry load had no effect on creation of new folios which mirrored the Sensex. But a careful observation of the research shows that the basis is debatable.
For, CAMS has compared the trend in new folio creation in a falling market, between April 2008 and July 2009, to the folio creation there onwards, from August 2009 to July 2010, during which period the market rose. This is a poor comparison, as it would only be expected that there would be more new folio creation in a rising market than there would be in a falling market. It would make sense to compare folio creation in similar market scenarios.
According to data presented by CAMS in a research report, from January 2008 to December 2008, when the markets fell, new folio creation declined. After this, as the market started to revive, new folio creation started to pick up.
What's interesting is that according to CAMS, "post August 2009 the average monthly run rate (of new folio creation) actually improved to 3 lakh folios per month". But it can be argued that folio numbers would have risen irrespective of a ban on entry loads in August 2009, as the markets had already picked up momentum.
CAMS says that from April 2008 to July 2009, the average folio creation was 2.73 lakh per month, and from August 2009 to July 2010 it averaged 3 lakh per month. Thus, while the numbers may be correct, the comparison is technically debatable.
A rising markets induces investors to invest and the opposite is also true. So, in a falling market, investors refrain from investments. Same is the case with entry load, as entry load was a negative factor for distributors and the ban was supposed to benefit investors.
In the period under review, the market was in decline for 11 of the 16 months and the entry load was effective during the entire 16 months. Hence, by the rule of thumb, the two negative influences should have seen low new folio creation. In the second phase, after the ban on entry load, the market was also rising and therefore these were two positive factors which would have naturally been an encouragement for new investments and therefore new folio creation. Still, the increase was just 10%.
What would be useful is comparing the effect of the entry load ban on creation of folios in a consistent market scenario. If we take an extended period for the first phase, say August 2007 to July 2009, the average folio creation is 4.6 lakh per month, which is in fact a lot higher than the post August 2009 phase, which averaged 3 lakh new folios per month. It must be mentioned that the two years from August 2007 to July 2009 included a bear run too.
The market scenario was consistent from August 2007 to July 2008 and was at about the same level from June 2009 to May 2010. While in both these periods the markets were doing alright, in the August 2007-July 2008 period the upfront commissions were applicable, whereas in the June 2009-May 2010 period the commissions were discontinued. In the first instance 84.7 lakh new folios were added at an average 7 lakh per month, whereas in the second period only 34.6 lakh new folios were created at an average 2.8 lakh per month.
Therefore, to say that the ban on entry load has not made much of a difference, is debatable.
The profit-after-tax of Future Capital for the financial year ended 31 March 2011, stood at Rs47.55 crore, a 175% jump vis-a-vis the year-ago period
Kishore Biyani-led Future Capital Holdings has reported a 26% decline in consolidated profit after tax to Rs44.15 crore for the year ended 31 March 2011, owing to one-time tax provisioning arising out of the merger of the company with its subsidiary.
On a standalone basis, however, the profit-after-tax of the company for the financial year ended 31 March 2011, stood at Rs47.55 crore, a 175% jump vis-a-vis the year-ago period, Future Capital Holdings said in a statement.
Future Capital Holdings vice chairman and managing director V Vaidyanathan said, “The realignment of the joint ventures with Centrum and the merger of Future Capital Holdings with its subsidiary are two significant events of the last quarter. These moves will release capital and set it up for growth.”
On a consolidated basis, tax provisioning was increased to Rs39.7 crore from Rs0.9 crore due to the one-time impact of the merger of Future Capital Holdings with subsidiary Future Capital Financial Services, while on a standalone basis, the tax provisioning was increased to Rs20.4 crore from Rs3.5 crore.
On a consolidated basis, the company’s total loan book grew by 90% to Rs2,855 crore from Rs1,495 crore a year ago.
Future Capital and Centrum Capital had rearranged the shareholding of their two existing joint ventures, FCH Centrum Wealth Managers and FCH Centrum Direct Ltd.
Future Capital has also merged its subsidiary, Future Capital Financial Services.
On Friday, Future Capital ended 0.95% up at Rs143.05 on the Bombay Stock Exchange, while the benchmark Sensex gained 1.07% to 18,531.28.