Regulations
SEBI slaps Rs2 lakh fine on Dynamic Stock Broking in Pyramid Saimira case

SEBI found Dynamic Stock Broking was one such entity which facilitated Nirmal Kotecha, one of the promoters and the largest shareholder of Pyramid Saimira then, to create artificial volumes in the company shares

 
Mumbai: Market regulator Securities and Exchange Board of India (SEBI) has slapped a fine of Rs2 lakh on brokerage firm Dynamic Stock Broking for its alleged role in the Pyramid Saimira Theatres Ltd (PSTL) share manipulation case, reports PTI.
 
SEBI said it has imposed "a penalty of Rs2 lakh on the noticee (Dynamic Stock Broking) which will be commensurate with the violations committed by it." 
 
In a probe conducted by SEBI, the market regulator said it had found the brokerage firm was one such entity which facilitated Nirmal Kotecha, one of the promoters and the largest shareholder of PSTL then, to create artificial volumes in the scrip of the company, thereby misleading innocent investors in the market.
 
The regulator said it was also revealed that the entity had carried out synchronised trades and created artificial volumes in the scrip of PSTL that too hugely only on 22 December 2008.
 
"...noticee created artificial volume and helped Kotecha to off load his stake in the market," SEBI said its order dated 7th November.
 
Earlier in April 2009, SEBI through an interim order had prohibited the brokerage firm among others from entering into any fresh agreements with new clients, which was further confirmed in July 2010.
 
The broking firm was penalised for violating the code of conduct for stock brokers prescribed by the SEBI.
 
The case pertains to alleged manipulation of PSTL shares by promoter P Saminathan with assistance from different market intermediaries to amass unlawful gains.
 
Saminathan is also alleged to have forged a SEBI letter that reportedly allowed PSTL to make an open offer for an additional 20% stake in the company.
 

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RBI asks banks to strengthen credit monitoring as NPAs jump

As per the data released by the central bank, gross NPA ratio increased to 3.1% in FY12 from 2.5% reported in FY11. Similarly, net NPA rose to 1.4% in FY12 from 1.1% compared to previous fiscal

 
Mumbai: The Reserve Bank of India (RBI) has said the banks need to strengthen their due diligence and credit appraisal system along with overall monitoring mechanism to contain the rising bad assets seen in the banking system, reports PTI.
 
"Banks need to, not only utilise effectively, the various measures put in place by the Reserve Bank and the government for the resolution and recovery of bad loans, but also have to strengthen their due diligence, credit appraisal and post-sanction loan monitoring systems to minimise and mitigate the problem of increasing non-performing assets (NPAs)," the RBI said in its report on 'Trend and Progress of Banking in 2011-12'.
 
The bank noted that both the NPA stock and slippage ratio has increased in the last financial year.
 
"During 2011-12, the NPA stock has risen. The slippage ratio of the banking system, which showed a declining trend during 2005-08, increased during 2008-12," it said.
 
As per the data released by the central bank, gross NPA ratio increased to 3.1% in FY12 from 2.5% reported in FY11. Similarly, net NPA rose to 1.4% in FY12 from 1.1% compared to previous fiscal.
 
In absolute terms, gross NPA stood at Rs1,423 billion at March 2012, while the net NPA stood at Rs649 billion.
 
Terming the slowdown in the economy and inadequate appraisal and monitoring of credit proposals as the major reasons behind the spurt in bad assets, the apex bank said the deterioration in asset quality is more pronounced in the case of public sector banks.
 
"During 2011-12, the gross NPAs of public sector banks increased at a higher rate as compared with the growth rate of NPAs at a system-level," the report said.
 
In addition to rise in gross NPA, fresh accretion of NPAs measured by the slippage ratio increased to 2.5% in 2011-12 from 2% reported in 2010-11.
 
The banking system also witnessed a rise in restructured asset in sync with the increasing NPA level in the system.
 
"The steep increase in gross NPAs during 2011-12 was accompanied by a considerable pick-up in the growth of restructured advances. This was mainly due to the steep increase in restructured advances by public sector banks, particularly nationalised banks," the report said.
 
As per data released by the RBI, total restructured assets as a percent of gross advances stood at just above 5% in FY12 from under 4% a year earlier.
 
In the sector wise analysis of bad asset, the report said deterioration in asset quality of public sector banks was spread across priority and non-priority sectors.
 
It also noted that while half of the bad asset came from priority sector, share of agriculture sector in total NPA registered an increase.
 

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Mallya agrees on 51% stake sale in United Spirits to Diageo

The deal could entail Diageo picking up to 51% stake in United Spirits for between $1 billion and $2 billion

 
New Delhi: Vijay-Mallya led United Breweries (UB) Group is understood to have reached a deal with world's largest spirit maker Diageo for a stake sale in United Spirits, reports PTI.
 
According to sources, the deal will be announced on Friday.
 
However, the exact details such as the quantum of stake and valuation could not be ascertained.
 
When contacted, an UB Group spokesperson declined to comment.
 
According to different reports, the deal could entail Diageo picking up to 51% stake in USL which could be valued between $1 billion and $2 billion.
 
In September this year, United Spirits had confirmed that it was in talks with UK-based Diageo Plc for a stake sale.
 
"United Spirits and Diageo Plc confirm that the UK-based company is in discussion with it and United Breweries Holdings in respect of possible transactions to acquire an interest in the liquor firm," United Spirits had said in a filing to BSE.
 
USL is the world's second largest spirits maker after Diageo and markets various liquor brands including Signature, Bagpiper, Antiquity, Royal Challenge, Signature in the country.
 
USL's sales volumes stood at 3.13 crore cases for the first quarter ended June 30.
 
Mallya-led United Breweries Holdings Ltd (UBHL), the promoter of USL, holds 18.03% stake as on 30th September.
 
Bogged down by the troubles of group firm Kingfisher Airlines (KFA), Mallya has been forced to seek ways to raise funds as lenders to the carrier have refused to sanction further loans.
 
State Bank of India (SBI), the largest lender to the airlines, wants the airline's promoters to bring in a minimum of $1 billion (about Rs5,400 crore) from any source by month-end for its revival.
 
Already the country's aviation regulator has suspended operating permit last month.
 
UBHL has said the company along with its subsidiaries has significant financial exposure on various counts to KFA, which has ceased to be a subsidiary with effect from 18 February 2012 and is now an associate company.
 
This exposure as on 31 March 2012 included equity investment of Rs2,114.28 crore, loans and advances Rs1,048.7 crore and other receivables Rs209.08 crore, and corporate guarantees to banks/aircraft lessors Rs8,925.86 crore.
 

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