Money & Banking
SEBI ask banks to use their account in other banks for ASBA

SEBI said bank should use the separate account solely for the purpose of making application in public issues and clear demarcated funds should be available in such account for ASBA applications


Mumbai: Market regulator Securities and Exchange Board of India (SEBI) has asked the banks providing the application supported by blocked amount (ASBA) facility for public offers to use their accounts in other registered banks while making their own applications, reports PTI.

 

The ASBA facility allows the application money to remain blocked in the applicant's bank account till the time the shares are actually allotted in the public offers and the banks seeking to provide these facilities need to first get registered with SEBI.

 

In a fresh circular issued in this regard, SEBI said it has come across reports about certain banks/merchant bankers of misinterpreting certain provisions of guidelines for using ASBA facility and applications by banks have been accepted using an account held with the applicant bank itself.

 

"...it is clarified that for making applications by banks on own account using ASBA facility, self certified syndicate banks (SCSBs) should have a separate account in own name with any other SEBI registered SCSB/s," SEBI said.

 

"Such account should be used solely for the purpose of making application in public issues and clear demarcated funds should be available in such account for ASBA applications," it added.

 

Under ASBA mechanism, investors can bid for shares while the money remains in his/her bank account and gets debited only after allotment of the shares.

 

The facility eliminates any delays related to refunds for the un-allotted shares. Initially, the facility was offered to retail investors only and was given to other investors in 2009.

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Reliance Industries approaches Tribunal against SEBI

In the case involving sale of shares of Reliance Petroleum, SEBI is said to have been investigating for a long time the alleged violation of insider trading regulations by RIL

Mumbai: Reliance Industries Ltd (RIL) has approached the Securities Appellate Tribunal (SAT) against market regulator Securities and Exchange Board of India (SEBI) which has issued show-cause notices to the corporate giant with regard to certain alleged irregularities in its share dealings, reports PTI.

 

RIL's appeal against SEBI was earlier scheduled by SAT for admission on Friday, but the Tribunal has adjourned the hearing to 11th January.

 

While details of RIL's appeal before the SAT could not be immediately obtained, SEBI has previously issued show-cause notices to the company in cases involving sale of shares of its erstwhile subsidiary Reliance Petroleum Ltd (RPL) and allotment of shares to certain firms against warrants linked to privately placed debentures issued by RIL.

 

RIL has already replied to SEBI notices in these cases.

 

In the case involving sale of shares of RPL, SEBI is said to have been investigating for a long time the alleged violation of insider trading regulations by RIL.

 

RPL used to be a separately-listed company, but it was later acquired by RIL and the merger process was also completed way back in 2009.

 

RIL has previously sought to settle the case through SEBI's consent mechanism, which allows for settlement of cases without admission or denial of guilt after payment of certain charges and disgorgement of ill-gotten gains, if any.

 

However, SEBI has rejected RIL's consent pleas on more than one occasion, terming the proposed payments as too less and on other grounds.

 

As per the company's annual report for the fiscal year 2011-12, SEBI had issued it show-cause notices in connection with the sale of shares of erstwhile RPL and the allotment of RIL shares to certain companies against detachable warrants attached to privately placed debentures issued by it.

 

"The company has submitted its reply to the same," RIL had said in the annual report.

 

RIL is currently buying back shares under a programme launched in February last year and has repurchased shares over Rs3,800 crore from public shareholders since then -- achieving 37% of the targeted amount of Rs10,440 crore.

 

The buyback programme, already the biggest buy-back by an Indian company, would end on 19 January 2013.

 

Yesterday, SEBI proposed significant changes to existing framework for buyback of shares by companies from open market, including lowering the process for its completion to three months and a minimum repurchase of 50% of the target.

 

The proposals have been made in a discussion paper floated by the market regulator and a final decision would taken after taking into account comments from the public.

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HC directs Union Bank of India to sanction education loan

The High Court said when a public examination had been conducted and the student had been given 78% in it, the bank cannot arbitrarily reduce the same to 38 marks and deny education loan

Madurai: Maintaining that guidelines of Union Bank of India for granting education loans was "arbitrary, without rationale and cannot be accepted by any reasonable and prudent man", the Madras High Court has directed the lender to provide Rs15,000 as education loan to enable a student of diploma in mechanical engineering to pursue his studies, reports PTI.

 

Justice S Tamilvanan, allowing a petition filed by Kumar, father of the student Naveenkumar, said though the student had scored 78% in the SSLC examination, the bank had awarded him only 15 marks for academic performance.

 

For other parameters, including branch of study, selection process followed by the polytechnic, monthly income of parents, period of stay of the student at the current place, and selection process followed by the polytechnic, the bank had allocated 23 marks.

 

The student had been informed that he could not be granted the education as he had scored only 32 marks, though he was expected to score 50 out of 100 marks, as per the bank guidelines.

 

The judge said when a public examination had been conducted and the student had been given 78% in it, the bank cannot arbitrarily reduce the same to 38 marks.

 

It was clear from the IBA Model Loan scheme that diploma students were eligible for loan. The petitioner's son with 78% was a meritorious student and could not be denied the loan, the judge said.

 

The student was undergoing a recognised DME course and hence he should be granted the loan. However, though the petitioner had applied for a loan Rs28,000, the maximum limit fixed by the bank was Rs15,000.

 

The judge directed the bank to sanction the loan within four weeks after verifying testimonials.

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