RBI not 'taken on record' Wal-Mart-Bharti joint operations

RBI has also referred alleged violation of the FEMA to the ED for investigation in regard to both Bharti Walmart and e-commerce venture Flipkart Online Services

New Delhi: The Reserve Bank of India (RBI) has "not taken on record" the documents filed for investment of Rs455 crore by Wal-Mart into Bharti group company Cedar Support Services and alleged Foreign Exchange Management Act (FEMA) violation in the matter has been referred to the Enforcement Directorate (ED), reports PTI.


"The form FC-GPR filed for issuance of the compulsorily convertible debentures (CCD) has not been taken on record by the RBI to ensure that the CCD are FDI compliant instruments and for the purpose certain information has been called for from the company," Minister of State for Commerce and Industry S Jagathrakshakan said in a written reply in the Rajya Sabha.


He said inward remittance of Rs455.80 crore into Cedar Support Services was reportedly brought in by Wal-Mart Mauritius Holdings Co Limited on 29 March 2010.


However, the documents for issuance of the CCDs filed with the RBI were "not taken on record by the central bank to ensure that the CCDs are FDI-compliant instruments and for the purpose certain information has been called for from the company," the minister said.


The RBI has also referred alleged violation of the FEMA to the Directorate of Enforcement for investigation in regard to both Bharti Wal-Mart and e-commerce venture Flipkart Online Services.


Flipkart is under the scanner for allegedly flouting foreign direct investment (FDI) rules which allow e-commerce companies with foreign investment to carry out only business-to-business (B2B) transactions but not business to consumer (B2C) transactions by creating complex structures that may not be permissible.


Meanwhile, the government today announced a time-bound inquiry by a retired judge into reports of lobbying by retail giant Wal-Mart to gain entry into India bowing to opposition pressure.


The issue of retail giant Wal-Mart lobbying in the US for access to Indian markets has created storm in Parliament with several parties demanding probe into the issue.


UPA's outside supporters RJD and SP, which last week bailed out the ruling coalition in FDI in retail matter, were among those demanding a thorough probe into reports that money was spent in India.


Wal-Mart had, in its disclosures to the US Senate, said it had spent $25 million over four years for various lobbying activities, including for gaining access to Indian markets.


RBI asks banks to consider issuing debit cards with photograph

Banks may consider issuing cards with photographs of the cardholder or any other advanced...

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NBFCs may need RBI nod for change in ownership control

According to RBI guidelines, all deposit-taking NBFCs would be mandated to obtain credit rating and also comply with Clause 49 of SEBI's listing agreement on induction of independent directors

Mumbai: Non Banking Financial Companies (NBFC) would need prior approval from the Reserve Bank of India (RBI) before making changes in their ownership control, a draft guideline of the central bank said, reports PTI.
The RBI's draft guidelines based on Usha Thorat Committee report also seek to make mandatory for all deposit-taking NBFCs to obtain credit rating.
Appointment of chief executives of NBFCs with asset size of Rs1,000 crore and above would require the RBI approval, it added.
"In the interest of good governance and the sensitivities associated with NBFCs...such companies, whether listed or not, will need to comply with Clause 49 of SEBI's listing agreement on corporate governance including induction of Independent Directors," the draft said.
The draft norms said existing unrated NBFCs-D will be given a period of one year to get rated, "thereafter, they would not be allowed to accept any fresh deposits or renew existing deposits, till they get themselves rated," it said.
On change in control or transfer of shareholding, the draft said that all registered NBFCs should take prior approval from the RBI where there is a change in control and increase of shareholding to the extent of 25 per cent by individuals or groups, directly or indirectly.
Regarding non-performing assets (NPAs), the RBI has proposed that asset classification and provisioning norms should be made similar to that of banks for all registered NBFCs irrespective of size.
At present, the period for classifying loans into NPAs in case of NBFCs is higher at 180/360 days compared to 90 days for banks.
The draft guidelines are based on recommendations made by the Working Group headed by former RBI Deputy Governor Usha Thorat. The panel was constituted to review the existing regulatory and supervisory framework of NBFCs.
The objectives of the Group were to address issues relating to regulatory arbitrage and systemic risk, so as to create a strong and resilient non-banking financial sector.
The draft further said it has been decided that Tier I capital be raised to 12% for all captive NBFCs and for NBFCs that are into lending or investment in sensitive sectors like capital market, commodities and real estate.
To address liquidity risk, it said all NBFCs should maintain high quality liquid assets. It has also proposed that henceforth NBFCs be classified under two categories -- exempted NBFCs and registered NBFCs.
All registered NBFCs would be under RBI regulation, while the RBI reserves the right to bring the other category under its regulation "should the need arise".
The RBI has sought stakeholder comments on the draft norms by 10 January 2013.


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