SEBI directs Euram Bank not to deal in securities market

Preliminary examination had revealed that some foreign institutional investors—India Focus Cardinal Fund, KII, Mavi Investment Fund and Sophia Growth—were converting the GDRs underlying the shares of the firms held by them into equity shares to sell in the Indian markets

Mumbai: Market regulator Securities and Exchange Board of India (SEBI) has confirmed its earlier order directing European American Investment Bank (Euram Bank) not to deal in the securities market in a matter related to alleged market manipulation using Global Depository Receipt, reports PTI.

SEBI had issued an interim ex-parte on 21st September last year directing Euram Bank “not to deal in securities or instruments with Indian securities as the underlying, in any manner whatsoever, until further orders.”

Euram Bank had filed written submissions before SEBI in October 2011.

The regulator said: “... the preponderance of probability at this stage suggests the involvement of Euram Bank in the alleged scheme of things.”

“... confirm the directions issued vide the ad interim ex-parte order dated 21 September 2011 in the matter of market manipulation using GDR issues, against European American Investment Bank AG,” it added.

SEBI had earlier been alerted by its surveillance systems of the large scale off market transactions scrips of certain firms—IKF Technologies, Avon Corporation, CAT Technologies, Asahi Infrastructure, K Sera Sera and Maars Software.

Preliminary examination had revealed that some foreign institutional investors—India Focus Cardinal Fund, KII, Mavi Investment Fund and Sophia Growth—were converting the GDRs underlying the shares of the firms held by them into equity shares to sell in the Indian markets.

It was also observed that most cancellations happened within a short period of time of their issue and on noticing that a few entities were repeatedly appearing as counterparties to 33%-75% of those shares sold by foreign institutional investors (FIIs) in the scrips.

The preliminary findings had pointed that India Focus was registered as a sub-account with Euram Bank.

In its submissions, Euram Bank had said that it has not facilitated India Focus to trade in India as a sub-account by getting registered itself as an FII.

SEBI, in its latest order said that it is “unable to accept this contention in the light of the trading activity of India Focus during the period 1 January 2009 to 31 May 2010.

The only sub-account of Euram Bank is India Focus.”

“Euram Bank has prima facie facilitated India Focus by getting registered as an FII and contrary to other FIIs it has not done any trading in the stock market,” it further said.

In the order, SEBI also said that it is unable to consider the submission at this stage since the investigation in the matter is not yet completed.

“Considering the facts and circumstances and also the submissions made, SEBI shall expeditiously complete the investigation in the matter, in the interest of justice and thereafter shall immediately take appropriate actions in accordance with law,” it said.

In another order related to the same case, SEBI modified its earlier order against Mavi Investment Fund and asked the firm to “deposit sale proceeds in a bank fixed deposit earning interest” and barred it from “withdrawing the money from the account without prior permission” of the regulator.

 

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Housing finance may come under priority lending

“We are trying to put housing finance for weaker section as a part of priority sector. There is a committee which is looking into it. Hopefully, by the first week of February this report will come,” RBI deputy governor HR Khan told reporters

New Delhi: The Reserve Bank of India (RBI) on Monday said it is considering categorising housing finance for weaker sections as priority sector lending by early next month to ensure adequate flow of credit, reports PTI.

“We are trying to put housing finance for weaker section as a part of priority sector. There is a committee which is looking into it. Hopefully, by the first week of February this report will come,” RBI deputy governor HR Khan told reporters here.

The committee is headed by Union Bank of India chairman and managing director MV Nair, was constituted by the RBI to look into various issues related to priority sector lending, including review of loan limits under the segment.

The committee has sought to address issues like desirability of simplifying the approach to direct lending, inconsistencies or ambiguities in the existing guidelines, nature of activities presently classified as priority sector that need relook and new areas which should be incorporated.

The terms of reference of the Nair Committee is to revisit the current eligibility criteria for classification of bank loans as priority sector with reference to nature of activities and types of borrowers (individuals versus institutions, corporate and partnership firms) of loans.

It will review nature of activities and types of borrowers (individuals versus institutions, corporate and partnership firms) of loans which can be brought under priority sector segment.

The terms of reference of the panel include review of limits on loan amounts.

It will also review appropriate documentation and due diligence thresholds to ensure that loans extended by banks are for the eligible categories of purposes and borrowers, which need special attention and treatment, the terms of the report state.

Besides, the panel will consider the desirability, or otherwise, of capping interest rate on priority loans.

The panel will also review the current allocation mechanism for Rural Infrastructure Development Fund (RIDF) and other funds.

The RBI deputy governor further said the apex bank is also trying to co-ordinate with the government and market regulator SEBI for developing and broadening the corporate bond market.

As much as 40% of the total bank lendings is for priority sector including agriculture and small sector industry.

 

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Core industry growth slows to 3.1% in December

The slowdown in the core sector is likely to impact adversely the IIP figures for December. The IIP numbers will be released in the second week of February

New Delhi: In a poor performance, the eight core industries grew by 3.1% in December mainly due to slackening output of crude oil, steel and natural gas, reports PTI.

The eight core industries, which include coal, cement, natural gas, petroleum refinery and fertilisers, had recorded a growth rate of 6.3% in December 2010.

This is the second lowest growth rate of the core industries in 2011-12 after October when the infrastructure sectors had expanded by just 0.3%.

For the April-December this fiscal, the growth was lower at 4.4% compared to 5.7% in the corresponding period of 2010-11 in wake of deceleration in investment.

The eight industries together contribute 37.9% in the overall Index of Industrial Production (IIP).

As per the data released by the commerce and industry ministry, crude oil production contracted by 5.6% in December against 15.8% in the same month last year.

Natural gas production too contracted by 10.8% against (-) 0.2% year-on-year.

In December, the petroleum refinery output slowed to 0.8% (from 8.3%) and steel to 2.2% (from 9.4%).

On the other hand, coal output was up by 5.6% in December this fiscal from 3.8% year-on-year.

Fertilisers segment expanded by 0.8% (from 0.3%), cement by 13.3% (from minus 2.2%) and electricity by 8% (from 5%).

Concerned over slowing economic activities in the country, finance minister Pranab Mukherjee in Chicago had said one of the key objective in the current year is to rejuvenate the markets and improve the business sentiments which have been at low levels for most of the last year.

As per a latest CII survey, the Business Confidence Index (BCI) in the country declined by five points to 48.6 during the October-December quarter.

During April-December, coal production declined by 2.7% against 0.8% growth year-on-year. Crude oil output was meagre 1.9% during the period against 12% in the year-ago period.

The slowdown in the core sector is likely to impact adversely the IIP figures for December. The IIP numbers will be released in the second week of February.

 

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