SEBI fixes Rs5 crore floor for anchor investors in public issues

The SEBI board today mandated listed entities to submit business responsibility reports (BRRs), as a part of their annual reports. It has also decided to specify a maximum tenure of 12 months for warrants issued along with public/rights issue of securities to avoid the possible misuse

Looking to further deepen the primary market, regulator Securities and Exchange Board of India (SEBI) today fixed the floor for allotment of equity shares to anchor investors under public issues at Rs5 crore.

The SEBI board of directors, which met in Mumbai today, also fixed a maximum tenure of 12 months for warrants that are issued alongside a public or rights issue of securities to avoid possible misuse.

“To make the concept (of anchor investor) more effective, it has been decided to prescribe a minimum allotment size of Rs5 crore and maximum number of anchor investors, slab-wise,” SEBI said in a statement after the board meeting.

Anchor investors buy shares of a company before the launch of a public issue. The concept of anchor investors (AIs) was introduced by SEBI in June 2009, as a class of committed investors who can be relied upon to anchor an issue of capital in all market conditions, adverse or otherwise, it said.

“It has been decided to specify a maximum tenure of 12 months for warrants issued along with public/rights issue of securities to avoid possible misuse. The issuer would also be required to provide disclosures about utilisation of funds so raised, both in the offer document, as well as on a continuous basis,” SEBI said.

Presently, regulations are silent on the tenure of warrants offered alongside public and rights issues.

The market regulator has said that listed entities have to submit ‘Business Responsibility Reports’ as part of their annual reports, describing measures taken by them along the key principles envisaged in the ‘National Voluntary Guidelines on Social, Environmental and Economic Responsibilities of Business’ framed by the ministry of corporate affairs.

This has been done in order to assess the fulfilment of the environmental, social and governance responsibilities of listed entities.

“To begin with, the requirement will be applicable to the top 100 companies in terms of market capitalisation and would be extended to other companies in a phased manner,” the statement said.

The regulator has also decided to have a separate set of disclosure norms for funds.

“Considering the constraints in disclosure by investee companies regarding funds (such as venture capital funds, etc), which are shown as one of the promoters of such investee companies, it has been decided to specify a separate set of disclosures for them,” it said.

The board meeting also approved amendment to its rules to increase the net worth requirement of Debenture Trustees to Rs2 crore from Rs1 crore earlier.


Further upmove likely: Thursday Closing Report

If Nifty holds above today’s high it may go up to 4,885

The indices witnessed a smart bounce back in the last hour, erasing nearly half of the losses that were seen in the last trading session on short covering by investors. As we had mentioned in our Wednesday’s closing report, if the index held itself above the previous low we would see a small bounce back. Today, the Nifty crossed yesterday’s lows and made a smart recovery from that level. If the index is able to maintain itself above today’s high of 4,771, we may see an upmove to the level of 4,885. However, the strained upmove may be wiped off if today’s low is breached. The National Stock Exchange (NSE) saw a volume of 83.32 crore shares. Volumes were higher because today was the expiry date for November derivatives.

The market opened flat tracking the weak Asian markets in morning trade and a negative close of the US benchmarks. The absence of any positive triggers on the domestic front also weighed on investor sentiments. The Nifty opened two points higher at 4,708 and the Sensex added 16 points to resume trade at 15,716.

However, the indices could not sustain the initial gains and were soon pushed into the negative amid choppy trade. Selling pressure in the morning session led the market to the day’s low at around 11.30 am. At the lows, the Nifty went below the 4,700-mark to 4,639 and the Sensex fell to 15,480.

Buying interest in select stocks in trade thereafter pushed the market higher. The indices managed to touch the previous day’s close in post-noon trade but the gains were capped by sellers once again.

The market entered the positive territory in the last hour supported by the European bourses, which were trading in the green. The local benchmarks went on to touch the day’s high around 3pm with the Nifty rising to 4,771 and the Sensex going up to 15,901. The benchmarks closed higher with the Nifty gaining 50 points at 4,756 and the Sensex settling at 15,858, up 159 points up.

The advance-decline ratio on the NSE was a positive 885:806.

In the broader market space, the BSE Mid-cap index surged 1.40% and the BSE Small-cap index rose 0.38%.

The BSE Consumer Durables index, which was the long sectoral gainer yesterday, turned out as the only loser today, down 0.21%. The top sectoral gainers were BSE Auto (up 2.45%); BSE Capital Goods (up 2.31%); BSE TECk (up 1.74%); BSE Healthcare (up 1.68%) and BSE Realty (up 1.34%).

Maruti Suzuki (up 4.02%); Bajaj Auto (up 3.71%); Bharti Airtel (up 3.65%); ONGC (up 2.90%) and Larsen & Toubro (up 2.76%). The major losers on the index were Hindalco Industries (up 1.26%); Hero MotoCorp (up 0.95%); Sterlite Industries (down 0.67%); ITC (down 0.10%) and State Bank of India (down 0.06%).

The Nifty leaders were GAIL India (up 4.26%); ONGC (up 4.12%); Sesa Goa (up 3.73%); IDFC (up 3.59%) and Ambuja Cement (up 3.45%). SAIL (down 3.19%); Reliance Power (down 2.61%); ACC (down 1.84%); Hero MotoCorp (down 1.58%) and Ranbaxy (down 0.62%) settled at the bottom of the index.

Markets in Asia settled mostly higher on positive economic data from the US overnight. However a weak German bond auction made investors nervous.

The Hang Seng advanced 0.40%; the Jakarta Composite rose 0.24%; the KLSE Composite surged 103%; the Straits Times added 0.02%; the Seoul Composite gained 0.67% and the Taiwan Weighted settled 0.85% higher. On the other hand, Shanghai Composite declined 0.73% and the Nikkei 225 tanked 1.80%.

Back home, foreign institutional investors were net sellers of stocks totalling Rs1,186.42 crore on Wednesday while domestic institutional investors were net buyers of shares amounting to Rs926.16 crore.

Founder and executive chairman of the country’s only listed microfinance institution SKS Microfinance, Vikram Akula, on Wednesday resigned from the board in wake of the huge losses suffered by the Hyderabad-based firm. Terming the resignation of Mr Akula as ‘voluntary’, the company has appointed PH Ravikumar as its interim non-executive chairman. SKS Microfinance shed its early gains and ended 1.13% lower at Rs114.15 on the NSE.

Jindal Saw has bagged orders worth $190 million (around Rs1,000 crore) to supply large diametre pipes and ductile iron pipes for various export markets. In a communiqué to the exchanges, the company today said these orders would be executed in the next 12 months. The stock jumped 6.91% to Rs120.70 on the NSE.

Financial Technologies (India) has launched five new offerings in the power trading arena. The company, a leader in multi-asset and multi-currency trading and settlement solutions, launched PowerARMS, Tradedart, TSO Computation System, eRegistry and ECS (Exchange Customisation Services). These solutions are currently being used by various power trading exchanges such as the Indian Energy Exchange. The stock lost 0.49% to close at Rs556.


SBI abolishes penalty on pre-payment of housing loans

State Bank of India has decided to abolish pre-payment charges on home loans, giving some succour to borrowers who want to foreclose their accounts. The decision from the largest lender will prompt other lenders to follow the suit

New Delhi: State Bank of India (SBI), the country’s largest lender, has decided to abolish pre-payment charges on home loans, giving some succour to borrowers who want to foreclose their accounts, reports PTI.

“We have decided to do away with the pre-payment charges on all kinds of housing loans with immediate effect,” a senior official of the bank told PTI.

The bank has been charging pre-payment penalties only on housing loans with floating interest rates taken before May 2011, the official said. It has been charging about 2% of the outstanding amount as penalty if borrowers opted to foreclose their loans.

The decision from the largest lender will prompt other lenders to follow the suit.

The total outstanding home loan of SBI rose to Rs92,383 crore at the end of September against Rs86,769 crore in March 2011.

At present, some banks are charging up to 2% as pre-payment penalty on the loan outstanding, if a borrower settles the full payment before maturity by switching over to another lender.

No pre-payment fine is charged if borrowers pay using their own funds.

It may be noted that the Reserve Bank of India (RBI) has indicated that it would scrap prepayment penalties charged by banks.

“It is proposed to implement the recommendations of the Damodaran Committee, on which a broad consensus has emerged, as also the action points which were identified by the IBA (Indian Banks’ Association) and BCSBI (Banking Codes and Standards Board of India) in the last Banking Ombudsmen conference,” RBI had said in its mid-year credit policy review.

Housing finance regulator National Housing Bank (NHB) has directed all housing finance companies to desist from imposing a pre-payment penalty on home loan borrowers last month.

The levy of a charge on borrowers for pre-closure of housing loans by housing finance companies (HFCs) has been considered further by the NHB in the light of subsequent developments and it has been decided that hereafter, housing finance companies should not charge a pre-payment levy or a penalty on pre-closure of housing loans, the regulator had said in a notification.

In addition, the NHB has also directed all HFCs to have uniform and not differential rates of interest for old and new borrowers that have the same credit or risk profile.




5 years ago

The facts: 1. none of the banks have any deposits with maturity exceeding five years so they do not lose money 2. they take corporate deposits at 9% CDs and give out loans at 9% unsecured CPs to the same corporates 3. they charge no prepayment to corporates 4. even after agreeing to waive, hardly any bank has done the same citing administrative issues and no notice from head office 5. this when they take 5 seconds to increase interest rates after RBI increases repo rates, which has no impact on their cost of funds as they are not increasing the deposit rates and even when they increase the deposit rates it is on new deposits and not on old deposits 5. the banks take all the deposits at fixed rates while lending at floating rates to retail punishing them for interest rate changes which only increase and not decrease (unlike for corporates where both are at floating rates and around the same for leading corporates) 6. they provide no incentives to you even when your credit history and score are both excellent
RBI has been able to do nothing as this issue has been dragging for four years. It is a watchdog that only barks at retail customers and helps banks and corporates enjoy the benefits at retail customers expense.

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