RBI panel proposes tough regulatory norms for NBFCs

Besides prescribing threshold limits, the working group headed by former RBI deputy governor Usha Thorat suggested that NBFCs should be subjected to the same regulations as banks with regard to provisioning norms and lending to stock brokers and merchant bankers

Mumbai: A Reserve Bank of India (RBI) panel has advocated tough new norms for non-banking financial companies (NBFCs) with the aim of strengthening the regulatory and supervisory framework for such lenders, reports PTI.

Besides prescribing threshold limits, the working group headed by former RBI deputy governor Usha Thorat suggested that NBFCs should be subjected to the same regulations as banks with regard to provisioning norms and lending to stock brokers and merchant bankers.

"Accounting norms applicable to banks may be applied to NBFCs," it added.

The working group further said that all NBFCs with assets of over Rs1,000 crore, whether listed or unlisted, should be made to comply with Clause 49 of the Securities and Exchange Board of India's (SEBI) listing agreement, which pertains to the composition of a company's board of directors.

It also called for annual stress tests and inspection of such NBFCs to ascertain their vulnerability.

The panel also suggested that NBFCs should have a minimum 12% Tier-I capital adequacy ratio-which is the ratio of the bank's core capital to its risk-within three years of registration.

It also recommended assigning a higher risk weight to the capital market and commercial real estate exposure of NBFCs that are not sponsored by a bank or do not have any bank as part of their group.

The RBI panel suggested the imposition of a risk weight of 150% for capital market loans and 125% for commercial real estate loans by such NBFCs.

It also advocated giving NBFCs benefits under the Securities and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act.

The panel, however, suggested retention of the minimum net-owned fund requirement (NOF) for all new NBFCs that wish to register with the RBI at the present Rs2 crore till the RBI Act is amended.

"The RBI should, however, insist on a minimum asset size of over Rs50 crore for registering any new NBFC. Existing NBFCs below this limit may deregister or be asked to seek a fresh certificate of registration at the end of two years," it said in the report.

Moreover, any transfer of shareholding, direct or indirect, of 25% and above, a change in control, merger or acquisition of any registered NBFC should have prior approval of the Reserve Bank, the panel suggested.

The working group also called for recognition that registration as NBFC with RBI provides comfort to lenders and investors and enables leveraging of public funds and simplification and rationalisation of the scope of regulation and registration.

The RBI has sought comments on the report from all stakeholders and the public by end-September 2011.

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Insecticides India plans to invest Rs70 crore on expansion

Insecticides India will set up a new plant in Rajasthan and also ramp up the capacity of the existing five plants

Insecticides India Ltd plans to invest about Rs70 crore over the next two years on expansion, including setting up a new plant in Rajasthan, a top company official said today.

"We are planning to expand the capacity of formulation and technicals in the next two years and for this, the company will set up a new plant in Rajasthan and also ramp up the capacity of the existing five plants," Insecticides India Ltd Managing Director Rajesh Aggarwal told PTI.

At present, the Delhi-based company has five plants in Rajasthan, Jammu and Gujarat, where it manufactures pesticide formulations and technicals (basic chemicals). Under the expansion programme, the company would ramp up its formulations production capacity to 5 lakh tonnes per annum from the current 3.5 lakh tonnes, while its technicals production capacity would be increased to 22,000 tonnes from 12,000 tonnes at present. Insecticides India is scouting for land for its third plant in Rajasthan, Aggarwal said.

Asked about the investment involved in the expansion plan, he said, "We will invest about Rs 60-70 crore on expansion." Aggarwal said the company has a presence in almost all parts of the country. Maharashtra, Andhra Pradesh, Karnataka and Tamil Nadu contribute about 40% to the company's turnover, which stood at nearly Rs480 crore last fiscal. Its net profit was Rs32.21 crore in 2010-11 fiscal.

Insecticide India's turnover grew by 20%, while its net profit rose by 14% in 2010-11 vis-a-vis the previous year. About one-third of the company's revenues come from four products--Monocil, Lethal, Victor and Thimet. The company had recently acquired insecticide brand Monocil from Nocil Ltd. Monocil is a systemic insecticide-cum-acaricide that controls a broad spectrum of pests in a wide range of crops.

In the late afternoon, Insecticide India shares were trading at around Rs384.80 on the Bombay Stock Exchange, 7.70% up from the previous close

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Sushrut Adler to open manufacturing unit in Pune by March 20 12

Sushrut Adler plans to expand its products slate to cater to ageing-related bone diseases

Orthopaedic solutions provider Sushrut Adler Group said recently that it will open a new facility at Pune by this fiscal-end, which will help it expand its manufacturing capacity.

The group, which has a strong fracture management (traumatology) portfolio and a presence in the spine and reconstructive orthopaedics areas, plans to expand its products slate to cater to ageing-related bone diseases. "We are going to move into ageing-related diseases like Osteoarthritis (OA), for these we need to make implants with longevity and the new facility in Pune will be for producing new products," said Ajay Pitre, managing director, Sushrut Adler group.

He, however, did not share investment details on the new plant. When asked about expected revenue of the firm on the back of the new initiatives, he said: "In the next three years, we are looking to triple revenues from the present Rs40 crore." Currently, the company has a plant at Ratnagiri, in Maharashtra. The group, which started its operations in 1973, now has a network of over 140 distributors in India and a presence in 28 countries.

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