SEBI to embark on transparency drive

SEBI generally does not make public its ongoing probes on the ground that the investigations could be jeopardised by interest parties. However, regulators in the US and some other countries generally issue a public statement even at the time of launch of their investigations

New Delhi: Market regulator Securities and Exchange Board of India (SEBI) has decided to embark on a transparency drive with an aim to make its functions as transparent as possible, reports PTI.

As part of the proposed move, SEBI will make public all the prosecution cases undertaken so far in the interest of the markets and investors and might consider revealing even some of its ongoing probes, depending on their sensibility.

The proposed moves, which also include appointment of a chief information officer (CIO), are being seen as part of a new operating environment being ushered in by UK Sinha, who succeeded CB Bhave as SEBI chairman in February this year.

In the past, SEBI has faced the flak for being surrounded in a veil of secrecy, which has been often defended in the name of possible misuse of the information by vested parties.

SEBI generally does not make public its ongoing probes on the ground that the investigations could be jeopardised by interest parties.

However, regulators in the US and some other countries generally issue a public statement even at the time of launch of their investigations.

Besides, SEBI has also decided to appoint a CIO for maintenance and dissemination of all information from it.

The regulator has been told by its board of directors, which includes nominees from the central government, that it needs to appoint a CIO for proper information dissemination.

The board also suggested SEBI to develop a strategic action plan for a period of 3-5 years as against the current practice of such plans being framed for one financial year.

A longer-period strategic action plan would help the regulator maintain better business continuity and transparency in its various functions in the interest of investors and the markets, sources said.

Besides, SEBI has been asked to undertake necessary measures for securing its data and those of market entities from possible cyber attacks and to maintain its business continuity.

The board has also suggested further strengthening of SEBI's various regional offices, as against previously proposed attempts to centralise most of its functions.

On its proposed move to make public as many prosecution cases as possible, SEBI recently uploaded on its websites lists of various kind of cases.

These include cases dismissed in the prosecution, cases that resulted in convictions, prosecution cases launched against collective investment scheme entities, cases where accused was declared as proclaimed offenders and cases that resulted in compounding.

These lists are of cases till 31 March 2011 and SEBI intends to add many more such lists in the coming days.

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RBI allows FIIs, MFs to hedge risk in corporate bonds from Oct

The central bank had in 2008 planned to introduce the CDS for corporate bonds, but postponed the move in view of the global financial crisis, which was caused by large scale trading in such debt instruments

Mumbai: The Reserve Bank of India (RBI) today came out with a credit default swap (CDS) guidelines that would allow corporate entities including insurers, foreign institutional investors (FIIs) and mutual funds to hedge risk against default in corporate bonds to which they subscribe, reports PTI.

The guidelines, which were finalised by the RBI after receiving views from stakeholders, will come into effect from 24th October, it said in a notification.

CDS is a risk management product which helps entities guard against possibility of defaults in repayment of corporate bonds.

As per guidelines, FIIs, banks, insurers, non-banking finance companies (NBFCs), listed companies, housing finance companies, provident funds and primary dealers can buy credit protection under the scheme.

It further said that banks, primary dealers and NBFCs with sound financial and good track record will be allowed to act as market makers or facilitators (for buying and selling of such swaps).

The bonds for the purpose of CDS would include unlisted and unrated debt instruments, including those issued by the infrastructure companies engaged in sectors like road, port and telecommunication, power among others.

"CDS would increase investors' interest in corporate bonds and would be beneficial to the development of the corporate bond market in India," the RBI said.

Elaborating on the guidelines, the RBI said that besides banks, the NBFCs and primary dealers with a net owned fund of Rs500 crore will be permitted to act as market makers.

The guidelines further said that entities will only be allowed to buy CDS contracts to hedge credit risk and not for speculation.

Earlier in February, the RBI had formed the draft guidelines for allowing corporates to hedge risk against CDS.

The central bank had in 2008 planned to introduce the CDS for corporate bonds, but postponed the move in view of the global financial crisis, which was caused by large scale trading in such debt instruments.

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‘Discounts on apartment prices are available all the year round’

Sachin Chaudhury, business head of Indiabulls Housing Finance, underlines the importance for home buyers not to be misguided by aggressive pricing by developers or be lured by freebies, but to undertake a proper check of the property and location, before making a purchase

"Negotiate with the developer, and you may come up with great discounts. Unlike our belief, discounts are available round the year," says Sachin Chaudhury, business head of Indiabulls Housing Finance Ltd. Mr Chaudhury feels that a patient customer, who does his research well, has chances of making a better purchase and driving a hard bargain.

"Aggressive pricing often misguides customers. Generally, the price quoted in the advertisement is the raw cost of the least preferred flat. There are hidden prices for parking, maintenance, service and stamp charges, so don't get a shock later," he says.

Mr Chaudhury addressed a seminar, hosted by Moneylife Foundation in New Delhi, recently, and provided several tips for home buyers.

Many customers fall for the lure of freebies. But every 'free' item/facility has an add-on cost that builders may not mention earlier. At a time when developers are reeling under high debt, it is naive to assume that they will give away anything for free. However, the crisis for builders may emerge as a boon for customers, Mr Chaudhury suggests. It is mainly because builders are more desperate to sell now, with the off-take having reduced dramatically in the last two quarters and the severe loan and liquidity crisis.

Better deals are also available at the time of group bookings, since that also saves the builders a lot of hassle. Moreover, a good bargainer can gain customised fittings, flooring, and so on, and can design a convenient payment plan too. "Even brokers and underwriters (who buy properties en masse and sell to the public) can offer you good discounts," he says.

What many people forget is that the price of the property also depends on the locality where it is situated. So instead of blindly going for fancy 'countryside', 'riverside' or 'eco-surroundings' projects, located far off, it is better to check out first. "If you want a home in a place you don't know yet, go there and check it out for yourself. Do not limit yourself to inspecting the builders' project. How much is that area liveable?" Mr Chaudhury asks.

Mohammed Aslam, joint city head - Pune, Jones Lang LaSalle India, supports these views. "Property rates are not decided on the basis of land value alone-the surrounding infrastructure adds to the value of a location. If you have chosen your location well and are in a progressive and developing neighbourhood, your home will appreciate in value over the years, only because of the overall conveniences it will provide to future buyers," he says.

Mr Chaudhury underlines that it is always important to know when to buy. "If transactions are very low and prices are decreasing in a high-rate scenario, postpone buying. Buy a property where buyers are available with less effort and they are ready to buy with a shorter wait. This indicates that the situation is stable. And remember, if the price of the property is more than 25 times the annual rent that you are paying, stick with rentals," he says.

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