RBI extends short sale of G-Sec to 3 months

With a view to providing a fillip to the IRF (interest rate future) market and the term repo market, it is proposed to extend the period of short sale from the existing five days to a maximum period of three months, the RBI said

Mumbai: The Reserve Bank of India (RBI) on Wednesday said it has decided to extend the period of short sale of government bonds to a maximum period of three  months from existing limit of five days, reports PTI.

Short selling means selling securities which are not owned by the seller at the time of selling in order to buy it at lower prices later.

It has been decided to extend the period of short sale from the existing five days to a maximum period of three months (including the day of trade), effective from 1 February 2012, RBI said in a notification.

Participants undertaking short selling should ensure that these transactions are in conformity with fair market practices and are conducted in a transparent manner, it said.

In this connection, it said, participants may review their systems and controls to ensure that the same are appropriate to prevent market abuse like use of insider information, spreading of false or misleading information, distortion of the price-discovery mechanism, etc, for personal gains.

Further, participants shall also report to RBI any suspected cases of market abuse regardless of whether it was by their own employee, client or other market participant, it said.

Based on the recommendations of the Technical Group on the Central Government Securities Market, intraday short selling in central government securities was permitted in February 2006.

Subsequently, based on the feedback received, the period of short sale was extended to five days in January 2007, it had said.

With a view to providing a fillip to the IRF (interest rate future) market and the term repo market, it is proposed to extend the period of short sale from the existing five days to a maximum period of three months, it had said.

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RBI allows co-op banks to fix NRE deposit rates

RBI issued two separate circulars addressed to primary urban co-operative banks and state and central co-operative banks allowing them to fix interest rates on various non-resident deposit schemes, a move intended attract more funds from NRIs and arrest the slide in rupee in the forex market

Mumbai: The Reserve Bank of India (RBI) on Wednesday allowed co-operative and primary urban co-operative banks to fix their interest rates on various non-resident deposit schemes, reports PTI.

Extending the ambit of its recent decision to deregulate deposit rates, RBI said, “Banks are free to determine their interest rates on both savings deposits and term deposits of maturity of one year and above under Non-Resident (External) Rupee deposit accounts and savings deposits under Ordinary Non-Resident accounts with immediate effect.”

RBI issued two separate circulars addressed to primary urban co-operative banks and state and central co-operative banks.

The apex bank, earlier this month, freed interest rates on various non-resident deposit schemes by scheduled commercial banks, a move intended attract more funds from NRIs and arrest the slide in rupee in the forex market.

It had also put restrictions on forward contract in rupee to check speculations in the forex market.

RBI had already freed the saving and deposit rates for resident bank customers.

The deregulation in rates on NRE and NRO deposits is intended to make such funds more attractive at a time when the rupee has depreciated sharply during last few months.

RBI in its last monetary review said it is closely watching the rupee situation and will respond to it as appropriate.

The rupee has depreciated by over 15% in 2011 so far against the US dollar.

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SEBI bars 7 companies from capital market for violation of IPO norms

SEBI on Wednesday barred seven companies, their directors, merchant bankers and other related entities from participating in the securities market till further order for not complying with the disclosure norms in their IPO prospectus

Mumbai: Cracking whip against seven firms for not complying with the disclosure norms in their initial public offer (IPO) prospectus, the Securities and Exchange Board of India (SEBI) on Wednesday barred the companies, their directors, merchant bankers and other related entities from participating in the securities market till further order, reports PTI.

The merchant bankers who have been prohibited from participating securities market include “PNB Investment Services, the book running lead manager of IPO of Taksheel Solutions and Almondz Global Securities (PG Electroplast and Bhartiya Global Infomedia)”. Their CEOs too have been barred from participating in the capital market till further order.

“...by not complying with the regulatory obligation of making the disclosures, the company and its directors had not provided the vital information which is detrimental to the interest of investors in securities market,” SEBI order against Taksheel Solutions said.

It said that proceeds of IPO invested by the company in the Indiabulls Mutual Fund-Liquid Fund (amounting to Rs5 crore) be deposited in an escrow account, till further directions.

“Taksheel Solutions is prohibited from raising any further capital, in any manner whatsoever, till further directions,” it added.

Similar orders were passed against the other six firms.

The market regulator has asked them to deposit the proceeds from the IPOs in escrow bank accounts and also call back the IPO proceeds to their cash credit accounts.

Talking about the importance of lead book running mangers in an IPO, SEBI said if the merchant banker fails to act diligently and comply strictly with the letter and spirit of the regulations, the investors are put to grave danger, which may not be in the interest of the capital market.

“This is precisely what has happened in this (Taksheel) particular issue where lack of adequate and independent due diligence by the merchant banker has resulted into shenanigans on the part of the company and its promoters/directors,” the SEBI order said.

In its order against Tijaria Polypipes, SEBI said “the fraudulent, abusive, manipulative and illegal activities committed by the company Tijaria Polypipes and certain entities/persons to the detriment of the genuine investors and adversely affecting the integrity of securities market...SEBI as a regulator should immediately intervene...to stop further harm to investors...”

The other companies against which orders were passed, include, Bhartiya Global Infomedia, RDB Rasayans, Brooks Laboratories and PG Electroplast. Similar order too has been passed against Onelife Capital Advisors.

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