SEBI to frame regulations for alternative investments

While SEBI chief UK Sinha did not disclose what kind of alternative investments would fall under the new regulations, such schemes generally include those investing in art works, antiques, coins and stamps, as well as a host of other instruments other than popular avenues like stocks, commodities and derivatives

New Delhi: Entities promising hefty returns to gullible investors from 'offbeat' avenues like art, antiques and real estate may soon come under the scanner of the Securities and Exchange Board of India (SEBI), which is framing a new set of rules for 'alternative investments', reports PTI.

These alternative or offbeat investments are generally offered by wealth or portfolio managers in schemes focused on real estate, art works, antiques and even coins and stamps.

India currently classifies most of these schemes as 'collective investment schemes', which are regulated by SEBI, but a need has been felt to have a separate set of regulations for 'alternative investments'.

With a view to safeguard investors from falling prey to dubious schemes of portfolio managers, SEBI will soon come out with a separate set of guidelines for alternative investments.

The issue was discussed at SEBI's board meeting last evening, after which chairman UK Sinha said the regulator would frame regulations to govern alternative investments and portfolio wealth managers.

Globally, alternative investments are quite in vogue among rich investors, who are estimated to allocate 5%-10% of their investment portfolio on these products.

As per the annual World Wealth Report of Capgemini and Merrill Lynch Wealth Management, alternative investments are expected to account for nearly 9% of high net-worth individuals' (HNIs) financial assets in 2011.

These investments used to account for as much as 10% of HNIs' financial assets in 2006, but had fallen to as low as 6% by 2009 due to the economic slowdown.

While Mr Sinha did not disclose what kind of alternative investments would fall under the new regulations, such schemes generally include those investing in art works, antiques, coins and stamps, as well as a host of other instruments other than popular avenues like stocks, commodities and derivatives.

At times, these schemes offer hybrid products, which target both traditional and alternative investments.

SEBI regulates investments in stocks, mutual funds, debt securities, derivatives and mutual funds, among others, while there is a separate regulator for commodities.

However, India does not have separate regulations for alternative investments, which could include all investment avenues other than traditional ones like stocks, commodities, debt securities, derivatives and mutual funds.

In the recent past, there has been a mushrooming of portfolio managers offering schemes designed for investing in avenues other than traditional products like stocks and commodities, given the volatility in these markets.

However, investors are exposed to a high level of risk in the absence of any clear rules for 'alternative investments'.

The new rules would also apply to the estimated $1 trillion wealth management industry.

As part of the proposed regulatory framework for alternative investments, SEBI is already planning to set up an intermediary regulatory body with representation from the wealth managers themselves.

The new rules would cover entities offering wealth management or investment advisory services across various asset classes, irrespective of the different financial markets.

For the past few months, SEBI has been in consultation with the government, Reserve Bank of India (RBI) and other financial regulators for framing a new set of rules for wealth managers.

Given the size of the industry and, thereby, a higher risk of large-scale fraud or manipulation, the new rules could also allow SEBI and RBI to impose strict penalties.

Although there are no official figures available, the size of the wealth management industry is pegged at about $1 trillion, nearly double the size a couple of years ago.

While RBI and SEBI would be primarily responsible for ensuring compliance with the rules, help would be sought from other regulators, namely commodity regulator FMC (Forward Market Commission), the Insurance Regulatory and Development Authority (IRDA) and Pension Fund Regulatory and Development Authority (PFRDA), whenever needed.

SEBI also aims to frame a stringent set of rules for funds investing in art works, antiques, coins and stamps, with an aim to check black money flows into these products and safeguard the interests of genuine investors.

SEBI considers investment funds focused on art works, antiques, coins and stamps as "Collective Investment Schemes", which come under the ambit of the capital market regulator.

Globally, art funds are very famous as an alternative class of investments for rich investors and have started gaining some ground in India over the past few years.

These funds collect money from numerous investors, mostly HNIs, to invest them into art works, antique pieces and old and rare coins and stamps.

SEBI has already begun a consultation process with various stakeholders, including the central government and RBI, with an aim to frame the specific regulations for these alternative investment vehicles this fiscal.

Earlier, in 2008, a time when the art funds first became visible in India, the regulator had issued a public notice to warn investors against putting their money into art funds or schemes of entities not registered with SEBI.

At that time, the market watchdog had found art funds to be 'collective investment schemes' and said many of them were being launched by various entities without registering with SEBI.

As per the existing regulations, only an entity registered with SEBI as a Collective Investment Management Company is allowed to offer any collective investment fund or scheme, including those focused on art works.


ONGC June quarter net up 12% despite higher subsidy payout

In Q1, ONGC's fuel subsidy payout stood at Rs12,046 crore, more than double of Rs5,515 crore in the same period the previous year

New Delhi: State-owned exploration and refining major Oil and Natural Gas Corporation (ONGC) no Thursday reported a near 12% rise in its net profit for the quarter ended 30th June, even after its fuel subsidy payout more than doubled, reports PTI.

Net profit in April-June quarter rose 11.9% to Rs4,095 crore, ONGC chairman and managing director AK Hazarika told reporters here.

"Our gross realisation on crude sales was $121.29 per barrel in Q1 but after giving subsidy discounts our net realisation was only $48.76 per barrel, almost the same as the net realisation in the same period last fiscal," he said.

ONGC and other upstream firms make up for at least one-third of the revenues state refiners lose on selling diesel, domestic LPG and kerosene below cost. This assistance is in form of discounts on crude oil ONGC sells to refiners.

In Q1, the fuel subsidy payout stood at Rs12,046 crore, more than double of Rs5,515 crore in the same period the previous year, he said.

Mr Hazarika said the increased profitability was due to rise in crude oil output from joint venture projects like Cairn India's Rajasthan fields.

He added that Rs728 crore came from increased revenue because of increase in output from joint venture fields. Also, higher natural gas price gave Rs955 crore in additional revenue.

ONGC's crude oil production dropped 2% to 5.933 million tonnes and after including joint venture projects did its output show a 2.3% rise to 6.758 million tonnes.

Natural gas output dropped 2.7% to 5.603 billion cubic metres.

ONGC director (finance) DK Sarraf said the company paid Rs546 crore in royalty on behalf of Cairn India on the Rajasthan crude in April-June quarter.

Cairn India holds 70% interest in the Rajasthan oilfields but does not pay any royalty. ONGC paid Rs235 crore on its 30% share and Rs546 crore on behalf of Cairn India.

Last fiscal, ONGC had paid Rs1290 crore on behalf of Cairn India.

Revenue in April-June quarter was up 18.7% to Rs16,268 crore.


Children Toy Foundation helps to spread joy—and teaches children, through fun & games

In a world starved for joy, compassion and love, here’s an entity that helps children to learn, expand their horizons and enhance their creativity—through fun, not by instruction 

Many years ago, as a child, Devendra Desai wanted to play a game of chess with his mother, but she was busy preparing his lunch. But finally, she gave into her child's demand. Devendra's mother abandoned her daily chore and got a chessboard for her little wonder.

The child was thrilled—and enjoyed playing the game. This incident remained in Devendra's mind. Over the years, he started thinking of children who don't get to play. Then came a day when Devendra got the opportunity to play with a couple of kids near his Fort (south Mumbai) office. Subsequently, he made it a point to play with his neighbourhood kids. Such was the joy he received, that he established the Children Toy Foundation (CTF) in Mumbai.

CTF got its first funding from ICICI in 1982. Today the foundation has centres in Mumbai, Baroda and Allahabad. Devendra is now 63 years young—and still enjoys playing with his children.

And CTF now speaks the language of fun—a language every child understands. It delights kids with its toy vans donated by corporates, who have incorporated this activity as a part of their Corporate Social Responsibility (SCR) initiatives. L&T has its Nanha Munna Express, Vibha Inc (a US-based company) has its Laugh Van and Godrej has provided its Good Time Bus. These toy vans are now the face of CTF; they visit 33 BMC (Brihanmumbai Municipal Corporation) schools every month.

CTF also has its Khel Vigyan project, its motto is "Play together, stay together". The foundation has established a static library in City of Los Angeles Municipal School in Matunga (central Mumbai) where teachers play with children—from tiny tots to those in the seventh standard. From Rajawadi Municipal School (Ghatkopar, Mumbai) to DN Nagar Municipal School (at Andheri, another Mumbai suburb), these buses are the face of CTF.

Devendra has chosen not to marry—he considers the toy library his wife, the toys are his daughters and the games are his sons. His satisfaction comes from seeing his 'children' playing with other kids.

CTF works like a normal 'fun' school. A schedule is prepared every month. For example, during the monsoon, children are taught poems mirroring the mood of the season—during festivals, stories are recounted of the significance behind these occasions.

On a daily basis, five teachers visit a BMC school and conduct five sessions of one hour each. These one-hour sessions are divided into three parts of 20 minutes each—indoor games, outdoor games and other activities that include drama enactments, storytelling, craftwork, painting and puppet shows.

Kids play, learn and have fun during this hour. Five groups of ten kids are formed and they are supervised by the teachers. These teachers perform dramas and puppet shows and then children from each group come forth and present the same. Songs from popular cinema are a big hit—and a regular event in every session. The games that are taught range from puzzles, board games, educative games, memory tests and IQ-improvement games-all these help children to develop analytical thinking.

Vandana Sonawane, co-ordinator, CTF, told Moneylife, "We believe in education through games. These activities help in developing and enhancing their creativity as well as improving their concentration." These games not only amuse children but also stimulate spontaneous thinking—as a result kids boldly ask questions and put forward their views.  

To educate pre-teen girls, CTF also conducts sessions to educate them on life after adolescence. Since the school at Matunga doesn't have a drawing teacher, CTF conducts regular drawing classes for kids.

Since inception, funding has been a major problem for CTF as convincing corporates about their cause is difficult. With increasing diesel prices, it has become difficult to run these toy vans. Ms Sonawane told Moneylife, "Parking (issues) and getting permission from the RTO (Regional Transport Authority) for clearing these buses are the regular problems. With the Aadhaar centres (where people are being issued the Unique Identity Numbers) in BMC schools, often, we don't have rooms available to conduct sessions."

The real joy that CTF derives is watching kids turn their ideas into reality. Every month competitions are arranged for children where they get to voice their thoughts. Recently, CTF arranged a drawing competition for kids in kindergarten, in an attempt to test the awareness of these children. They were asked to draw the aftermath of the recent Mumbai blasts. A number of them displayed their imagination about the tragic incident-this indicates how city life has seared into their consciousnesses.

CTF has committed teachers who have been working for the foundation for over a decade. These senior teachers train the new teachers, volunteers and interns every second and fourth Saturday. After school hours, these senior teachers train their staff by playing games. Since most of the kids belong to the lower socio-economic background-and many children being reared by a single parent, CTF teachers regularly update themselves on issues and explain them to kids. The foundation's collection of over 70 indoor games and books of a wide variety allows these kids to remain happy... everyday. Ms Sonawane says, "We allow kids to carry books home by telling them that these are your books and you have to take care of them."

CTF participates in the Mumbai Marathon and the Joy of Giving (JOG) week every year. During the JOG week, it organises competitions, and corporates are invited to collect donations. The material made by the kids is also exhibited at these events.

People donate games, story books and stationery for kids-or sometimes simply come to play with them. With its belief that everyone including kids, parents and grandparents should play with children; CTF makes everyone to play for an hour before accepting any donations. Ms Sonawane said: "I get to play with the kids daily-this is my biggest joy."




5 years ago

Hope they are taking care of the disinfecting and hygiene before the toys are shared. Else this will be a health hazard!

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