SEBI asks FPIs to disclose interest in securities while offering advice

SEBI has spelt out the norms to be followed by the FPIs and their employees while rendering any investment advice through publicly accessible media

Overseas investors coming through the newly created foreign portfolio investor (FPI) route would need to disclose their direct and indirect interest in securities about which they offer investment advice, says Securities and Exchange Board of India (SEBI).


The new regulations, which were approved by SEBI’s board over the weekend and would be notified soon, also contain a detailed ‘Code of Conduct’ for the FPIs, a newly created category of overseas investors that would encompass existing classes like foreign institutional investors (FIIs) and qualified foreign investors (QFIs).


Besides, SEBI has clearly spelt out the norms to be followed by the FPIs and their employees while rendering any investment advice through publicly accessible media.


The FPIs and their employees would not be allowed to render “directly or indirectly any investment advice about any security in the publicly accessible media, whether real time or non real-time, unless a disclosure of his interest including long or short position in the said security has been made, while rendering such advice”.


Besides, the employee of an FPI would need to disclose the interest of his dependent family members and his employer, while rendering such advice.


The proposed Code of Conduct for FPIs also require them to ensure clear segregation of their own money and securities from its clients’ funds and assets, and also to maintain “arms length relationship between its business of fund management/ investment and its other businesses“.


The FPIs would also need to ensure that they do not engage in fraudulent and manipulative transactions in any security.


Besides, an FPI or any of its directors or managers should not indulge in insider trading, either through its own account or through any associate, family members, relatives or friends.


The FPIs would need to give an undertaking that they would not be party or instrumental in “creation of false market in securities listed or proposed to be listed in any stock exchange”, price rigging or manipulation of prices, or passing of price sensitive information to any person or intermediary in the securities market.


The FPI would also need to ensure that “good corporate policies and corporate governance are observed by it”, while maintaining confidentiality in respect to trades done on its own behalf and/or for its clients.


While ushering in easier entry norms and operational framework for overseas entities seeking to invest in Indian capital markets, the proposed regulations for FPIs also provide for strong checks and balances against any market manipulation or fraudulent activities.


RBI exploring possibility of bank licensing process more frequent

According to Dr KC Chakrabarty, deputy governor, the central bank is considering making bank licensing more frequent to accommodate more banks

In order to expand the reach of banking, the Reserve Bank of India (RBI) is considering making the bank licensing process more frequent and allow free entry of banks as and when necessary.


“We propose to carry forward these ideas and come up with a detailed road map of necessary reform and regulations for free entry and making the licensing process more frequent after we get comments from the stakeholders,” said Dr KC Chakrabarty, deputy governor of RBI in New Delhi.


RBI is in the process of issuing new bank licences consistent with the highest standards of transparency and diligence. RBI has already come out with a discussion paper on the banking sector in India, on which the regulator has invited comments from stakeholders.


“The document explores the possibility of a differentiated licence for small banks and wholesale banks, the possibility of continuous on-tap licensing and the possibility of converting large urban co-operative banks into commercial banks,” he said.


Currently the central bank is in the process of issuing new bank licences for which it has received applications from 26 entities including public and private sector. The RBI is likely to issue the licences by January 2014.


The apex bank has already set up an external committee of financial sector experts, headed by former RBI Governor Bimal Jalan, to scrutinise the applications.


“With a view to ensuring that the banking system grows in size to meet the needs of a modern economy and improve access to banking services, the RBI is considering giving some additional banking licences to private sector players subject to their meeting our eligibility criteria,” Dr Chakrabarty said.


He further said the regulator is encouraging foreign banks to adopt the wholly-owned subsidiary model to carry out business in the country.


“We have more than 44 foreign banks in the country and at least three of them are more than 100 years old ... RBI will encourage qualifying foreign banks to move to a wholly-owned subsidiary structure that will enjoy near national treatment,” Chakrabarty said.


He further said the banking system is well capitalised. “Profitability is reasonable, return on equity is reasonable, NPA is under control and it meets with all global standards of regulation for business,” he added.


He said the Indian economy is facing challenges of high inflation, slow growth and investment, the current account deficit (CAD) is above sustainable levels and fiscal deficit high.


“It is the intent and objective of the Government to attract and promote foreign direct investment in order to supplement domestic capital, technology and skill for accelerated economic growth,” he said.




4 years ago

Whether 7 = free entry, or free entry > 7

Surat police issue lookout notice against Asaram's son Narayan Sai

Fresh sexual assault complaints were registered against controversial self-styled godman Asaram and his son Narayan Sai in Surat after two sisters accused the duo of abusing them

Surat police has issued a lookout notice against self-styled godman Asaram Bapu's son Narayan Sai, following fresh sexual abuse complaints against the father-son duo lodged by two sisters.


Surat Police Commissioner Rakesh Asthana said, "We have issued a lookout notice against Narayan Sai, son of Asaram. We have informed immigration authorities that a grave offence has been registered against him. This (lookout notice) is a precautionary step so that he cannot leave the country".


Police teams have started investigation in the case and Narayan Sai is being traced, he said, adding that they have identified a few locations where he could be.


Yesterday, Asthana had said that they will interrogate Narayan Sai regarding the complaint.


Fresh sexual assault complaints were registered here yesterday against controversial self-styled godman Asaram and his son Narayan Sai after two sisters accused the duo of abusing them.


The complaint against Narayan Sai was registered at Jhangirpura Police Station in Surat, while the one against his father Asaram was transferred to Ahmedabad as the alleged incident happened there.


The elder sister in her complaint accused Asaram of repeated sexual assault between 1997 and 2006, during the time she had been living in his ashram on the outskirts of Ahmedabad city.


The younger sister filed a complaint against Asaram's son, accusing him of repeated sexual assault between 2002 and 2005 when she was living in their Surat ashram.


Police registered two complaints - one against Asaram and another against Narayan Sai - of rape, sexual assault, illegal confinement and other charges.


Asaram was arrested in August on charges of sexually assaulting a minor girl and has been in prison at Jodhpur in Rajasthan since then.


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