Govt Removes Requirement of Debenture Redemption Reserve Norm for listed companies, NBFCs
The government on Monday removed the requirement of 'Debenture Redemption Reserve' (DRR) for listed companies, non-banking financial companies (NBFCs) and housing finance companies (HFCs).
 
A statement by the Corporate Affairs Ministry said that the decision has been taken in pursuance of the budget announcements for 2019-20 by Finance and Corporate Affairs Minister Nirmala Sitharaman and the government's objectives of providing greater "ease of doing business" to companies in the country, as part of its 100 Days Action Plan.
 
"The Ministry of Corporate Affairs has amended the Companies (Share Capital and Debentures) Rules by removing Debenture Redemption Reserve requirement for Listed Companies, NCFCs and HFCs," it said.
 
Through the amendments, the provisions relating to creation of DRR have been revised with the objective of "removing the requirement for creation of a DRR of 25 per cent of the value of outstanding debentures in respect of listed companies, NBFCs registered with the RBI and for HFCs registered with National Housing Bank (NHB) both for public issue as well as private placements," said the statement.
 
The amendment would also aims to reduce DRR for unlisted companies from the present level of 25 per cent to 10 per cent of the outstanding debentures.
 
Earlier, listed companies had to create a DRR for both public issue as well as private placement of debentures, while NBFCs and HFCs had to create DRR only when they opted for public issue of debentures.
 
"It (the latest amendment) is aimed at creating a level-playing field between NBFCs, HFCs and listed companies on the one hand and also between them and Banking Companies & All India Financial Institutions on the other, which are already exempted from DRR," it said.
 
Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.
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    COMMENTS

    Ramesh Poapt

    4 months ago

    bad one indeed!

    vikram chinmulgund

    4 months ago

    Debt without liability to pay - Awesome Idea of Chaiwalla. Modi govt. slogans / schemes have been gradually undoing all the reforms brought in by P.V. Narsimha rao + Manmohan Singh in the 90's. The effect on the economy is obvious now. India is now considering offering bonds internationally which is the same as begging other countries for money against an IOU. Instead of fixing the problem which means admitting policy errors the Modi govt. is just covering the issue with more paper money. First demonetization and now throw away the new currency into a black hole of debt without liability. Begging bowl to IMF is next.

    Ashit Kothi

    4 months ago

    WHAT IS 'EASE OF DOING BUSINESS' - RECKLESS BORROWING WITHOUT ANY REPAYMENT INTENTION. IT IS MISPLACED STEP.

    Ask Banking segment to pass on the benefit of reduction in rates to Corporate / Retail Borrowers. Bring down the actual (real) cost of capital. Delays in various permission, issue and renewal of various licenses, delay in resolving any financial disputes increase the cost of capital as resolution of issues take indefinate time.

    Balesh Sharma quits as Vodafone Idea CEO, Ravinder Takkar new chief
    In what is seen as a major casualty of the ongoing stress in the telecom sector, Vodafone Idea CEO Balesh Sharma has resigned with immediate effect.
     
    The company's board said on Monday that Sharma has resigned due to "personal reasons".
     
    The company has consequently appointed Ravinder Takkar as its MD and CEO.
     
    The board said that Sharma would take up a new role with the Vodafone Group, which will be announced in due course.
     
    Sharma's departure from the top post, however, is being seen as a casualty of the ongoing stress in the telecom sector. He was appointed the first CEO of merged entity Vodafone Idea less than a year ago. 
     
    The company is not doing well on the financial front and is also continuously losing subscribers.
     
    "The Board of Vodafone Idea Ltd today (Monday) announced that it has accepted Balesh Sharma's request for personal reasons to step down as CEO of Vodafone Idea," the company said in a statement.
     
    The statement noted that Sharma has overseen the successful integration of Vodafone Idea, resulting in the estimated timeframe to complete the integration falling from four to just two years. 
     
    "Balesh has driven the strategy of the combined business since its formation and he has also spearheaded the largest-ever equity raise in India," the company said.
     
    Takkar, who will takeover as MD and CEO with immediate effect, has been appointed for a three-year period.
     
    He is currently a Non-Executive Director on the board of the company and that of Indus Towers, where he is responsible for all Vodafone Group interests in India, the company said in a regulatory filing.
     
    Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.
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    COMMENTS

    Kshemendra Kumar Upadhyay

    4 months ago

    Excellent.

    Kshemendra Kumar Upadhyay

    4 months ago

    As per new law not spending 2% csr is a criminal offence, punishable with three years in jail, for big companies which fail to spend 2% of their profits on what the government defines as corporate social responsibility? Such spending was earlier voluntary. Making shortfalls a criminal offence will shift the emphasis from good outcomes to mere spending, with perverse results.

    IL&FS Mess: Long Delays and Confused Submissions by the Board
    The fourth and fifth progress reports on the resolution of Infrastructure Leasing & Financial Services (IL&FS) mess, submitted by the government-appointed IL&FS board to the National Company Law Appellate Tribunal (NCLAT) on 14th August, contain the Reserve Bank of India’s (RBI’s) inspection report on IL&FS. They have a scathing indictment of the erstwhile board of directors headed by founder Ravi Parthasarathy and his trusted ‘coterie’ of senior managers and friendly directors. 
     
    RBI’s observations have been widely reported by the business press; but what, probably, went unnoticed is that the RBI report dates back to 22 March 2019, that is, it is at least four months old. And, yet, there is no indication of any follow-up action by the new board, as directed by RBI. 
     
    We have no clarity on why the IL&FS board has been treating the resolution and reporting process with shocking carelessness. Very little seems to have happened since January 2019 until August 2019, as is evident from the disclosures in the 4th and 5th progress reports. 
     
    Consider this. The third progress report was submitted on 17 December 2018. Then, on 14 August 2019, we were told that the IL&FS board has submitted: i) an addendum to the 3rd report that is dated 15 January 2019; ii) the 4th progress report is also dated 15th January but submitted on 14 August 2019; iii) the 5th progress report is also submitted on 14th August. Hopefully, NCLAT will ask for an explanation for the long delay and confused submissions.  
     
    Remember, this is not a bunch of retired government officials struggling to unravel a 347-company conglomerate, on their own. They have fairly expensive help from five separate entities. In October 2018, it appointed Alvarez and Marsal as restructuring advisers with the mandate to evolve a resolution plan, manage stakeholders as well as maintain strict controls and manage day-to-day liquidity. It appointed Arpwood Capital and JM Financial as financial and transaction advisers. Grant Thornton has been commissioned for forensic audits and it has Cyril Amarchand Mangaldas as legal adviser (until May 2019, it also had the firm of Shardul Amarchand Mangaldas as legal adviser for IL&FS Transportation Network Ltd (ITNL) -- the largest of the four holding companies in the group).
     
    Had IL&FS still been operational, each of these companies would have shortly held an annual general meeting (AGM), where shareholders would want an update of activities over the year. Since IL&FS is under resolution, one would expect the progress report to provide this information to NCLAT with clearly delineated reports from all the consultants and advisers along with the fees paid to them (after all, auditors’ fees and directors’ fees are not a secret). 
     
    A financial expert points out, “any genuine update would provide material information since the last update.” Why are IL&FS progress reports so confused about the date, sequence and time of submission? How many times has the government-appointed board met from January to August 2019? What were the decisions taken at these board meetings? Shouldn’t the minutes of board meetings of a government-appointed board be disclosed, when it has been appointed specifically to ensure quick resolution?
     
    Now, consider the fact that the RBI report was submitted in March 2019. RBI, as banking regulator, had asked for its inspection report to be placed before the IL&FS board and for an action taken report to be submitted to it. The 5th progress report from IL&FS has no mention of the inspection report having been discussed by the board, let alone any action taken in response to RBI’s directives. RBI’s key observations are:
    • IL&FS has not disclosed any non-performing assets (NPAs) for the past four years;
    • Wide divergences were observed between reported and assessed position of assets classification and provisions;
    • The board failed to exercise oversight over the functions of the entity;
    • The board did not monitor the affairs of the downstream entities;
    • The board did not provide any rationale for funding of ITNL and other loss-making subsidiaries on an on-going basis, leading to the liquidity crunch at IL&FS;
    • There were serious deficiencies observed in credit appraisal. Fresh loans were sanctioned and disbursed to repay earlier loans; 
    • There was no mechanism for monitoring end use of funds; there was no board-approved investment policy;
    • ‘Unscrupulous, negligent and dormant management decisions’, involving huge sums of public money indicate that the (erstwhile) board was completely incompetent;
    • A significant number of IL&FS's borrowers were either unrated or had poor credit ratings and, in certain cases, funds were lent to insolvent entities or those already in trouble (much of this was already known through the Grant Thornton reports);
    • IL&FS’s risk management committee and investment review committee had not met for three years and decisions were taken by the committee of directors comprising a coterie of senior management;
    • Conflict of interest was rife and there were plenty of self-serving decisions which benefited individual directors/top management such as “renting out their properties as guest houses, providing high end vehicles and making numerous foreign trips etc”;
    • Systems and controls were lacking and the annual report disclosed only 169 companies whereas the new board discovered 348 entities; 
    • Credit appraisal was deficient; loans were given to repay old loans, significant number of borrowers were unrated, had a poor rating and, in some cases, were even insolvent. 
     
    But the moot question is: Did RBI’s annual inspection reports, over the past four years, note these lapses? If yes, why wasn't strict action initiated, given that IL&FS is a systemically important company subjected to stricter regulatory oversight? Did RBI reports in the past four years have to be placed before the board and submitted to the auditors? Did RBI check compliance? If not, did its officers collude with IL&FS to suppress facts?
     
    Fortunately, the Serious Frauds Investigation Office has asked RBI to conduct an internal investigation into its failure to act. Hopefully, it will include its failure to act on specific information from AIDQUA, a credible, Mauritius-based institutional investor in its Tirupur project. 
     
    Let’s not forget that RBI is just as responsible for the huge IL&FS debacle along with the compromised auditors and credit rating companies.
     

     

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    manojkamrarti

    4 months ago

    RBI lethargic working have been responsible for most of severe financial scams. More than 800 Urban cooperative banks are also suppressed scams NEEDING YOUR EXCLUSIVE COVERAGE which will bring relief to MILLIONS OF POOR PEOPLE having lost their life time savings.

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