CORPORATE UPDATES 08.02.2019

AUDITOR WHO 'KNEW NOTHING' BANNED FOR 5 YEARS BY NCLT

The Mumbai bench of the National Company Law Tribunal (NCLT) on February 6 barred Mukesh Choksi from being appointed as an auditor of any company for a period of five years holding him guilty of signing off on a company’s books without inspection and colluding with its promoters in a fraudulent manner. This is the first time the NCLT has passed an order barring an auditor in such a fashion. The NCLT passed the order in connection with a case by the Western Regional Director of the Ministry of Corporate Affairs against the auditor Mukesh Choksi, and the company he audited, Zen Shaving. Zen Shaving is accused of issuing an IPO in 1996, proposing to list its shares on the Pune Stock Exchange but failing to do so, and siphoning off funds raised through the issue The company has since changed hands, frequently changed offices and the current management remains untraceable, according to the MCA. When the company’s auditor, Mukesh Choksi, was questioned, he claimed to have no knowledge about the company’s affairs and said he had signed off on its books without seeing them To a string of basic questions asked about the company, such as the last time Zen Shaving held an AGM, Choksi replied: I don’t know. In its order, the NCLT also directed that the copy of the order be sent to National Financial Reporting Authority (NFRA) and ICAI to take proper action as they may deem fit. In the present times when the national economy is highly dependent upon the profitability and credibility of commercial institutions, the role of statutory auditors is becoming a very important tool of keeping a check and preventing re-occurrence of scams like Satyam, the NCLT said in its order. The role of a statutory auditor is vital, and auditor owes a fiduciary duty towards the nation It is necessary to take stern action against the person who has tried to diminish the credibility of the auditor’s profession. We hope the ICAI will take necessary action against auditor for his professional misconduct.

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GOVERNMENT DECIDES TO IMPRISON CORPORATE HEADS DELAYING PAYMENTS TO MSMES

Directors of companies delaying payments for supplies made by small businesses will face imprisonment up to six months or pay fines between Rs 25,000 and Rs 3,00,000 The Ministry of Corporate Affairs has notified new guidelines to address the concerns of small businesses over delayed payments that not only makes it mandatory for all companies to file half yearly returns detailing outstanding dues to MSME suppliers but also assign reasons if such delays are for more than 45 days. The new rules have been implemented to put pressure on companies to pay up Under the proposed changes, every private and public company will mandatorily file MSME FORM I with the the Registrar of Companies (RoC) by February 22 with details of all outstanding dues to MSME suppliers existing on the date of notification of rules on January 22. In addition, all entities will also have to file a return as per MSME Form I by October 31 for the period from April to September and by April 30 for the period from October to March. If there are any delays in payments, it has to be mentioned in the returns with the MCA reserving the right to penalise defaulting entities. In order to ensure adherence to the new rules, MCA has also proposed a fine of up to Rs 25,000 on companies defaulting in filing the information or delaying payments. The fines for directors, chief financial officer and company secretary of a defaulting company has been specified at not less than Rs 25,000 up to Rs 3,00,000 per person with provision also for imprisonment up to six months. The new rules will be applicable for every company that received goods or services 'from' MSME segment for which payment is due for 45 days or more. The companies that have no outstanding payments to MSMEs or such outstanding payments are not for more than 45 days are not required to file details in the specified form. For the purpose of new rules, MSMEs are defined on the basis of capital investment made in plant and machinery, excluding investments in land and building. Manufacturing units having investment below Rs 25 lakh were termed Micro, those between Rs 25 lakh and Rs 5 crore termed as Small and from Rs 5 crore to Rs 10 crore as Medium. Similarly, for Service units, corresponding investment thresholds were upto Rs 10 lakh Micro, between Rs 10 lakh to Rs 2 crore Small and between Rs 2 crore to Rs 5 crore Medium.

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SUPREME COURT UPHOLDS CREDITORS COMMITTEE SOVEREIGNTY UNDER THE IBC

The Supreme Court in a recent judgment has categorically held that commercial wisdom of the Committee of Creditors (CoC) is sacrosanct and not subject to judicial review Besides, the commercial wisdom of the CoC has been given paramount status without any judicial intervention for ensuring completion of the stated processes within the timelines prescribed by the I&B Code. There is an intrinsic assumption that financial creditors are fully informed about the viability of the corporate debtor and feasibility of the proposed resolution plan, the Court held. The Supreme Court bench of Justices AM Khanwilkar and Ajay Rastogi was hearing appeals in two cases, for which liquidation orders were passed under the IBC, Kamineni Steel & Power India and Innoventive Industries. While Innoventive Industries went straight into liquidation for not being able to gather the (then) necessary 75% of voting share of financial creditors constituting the CoC, Kamineni’s resolution plan despite having only 66% of voting share was approved by the NCLT Hyderabad Bench. The NCLAT, however, overturned this ruling in the case of Kamineni and remanded the case back to NCLT for liquidation. In the case of Innoventive, appeals were filed by the promoter as well as the worker’s union arguing that the dissenting financial creditors did not provide ‘reasons’ for not chosing to opt the resolution plan Several innovative arguments were advanced on behalf of Innoventive as well as Kamineni for pulling the companies out of liquidation – the voting threshold of 75% is not mandatory and even if it is considered to be so, those who abstain should not be included and the remaining votes should be allotted on a pro-rated basis; the voting threshold has been reduced to 66% during the pendency of these appeals, and should now be applied to both the cases; since the dissenting financial creditors failed to offer any reason for rejecting the resolution proposal, they did not do so in good faith but with malicious intent; CoC, being the custodian of public interest, is under a statutory duty to exercise its power under Section 30(4) of the IBC reasonably and fairly (Section 30(4) posits an obligation upon the CoC to adopt a resolution plan which is ex facie more viable than liquidation). The Supreme Court reading the law strictly, found that the 75% threshold is mandatory any other interpretation would result in rewriting of the provision and doing violence to the legislative intent. It further held that the NCLT and NCLAT, while admitting a resolution plan, can only consider factors enumerated in Section 30(2) and 61(3) respectively. Section 30(2) requires the Resolution Professional to confirm whether the resolution plan is in compliance with certain enumerated matters. The NCLT is required to ensure that has been done by the Resolution Professional. Section 61(3) provides limited grounds on which the NCLAT may hear an appeal from the NCLT order. However, in both cases, the application was filed under Section 33, that is for initiation of liquidation. In such a case, the NCLT is obligated to initiate liquidation process under Section 33(1) of the IBC. The NCLAT under 61(3) limits the grounds under which the NCLAT may hear an appeal. The Court found that upon receipt of a rejected resolution plan the NCLT is not expected to do anything more; but is obligated to initiate liquidation process under Section 33(1) of the I&B Code. The legislature has not endowed the NCLT with the jurisdiction or authority to analyse or evaluate the commercial decision of the CoC much less to enquire into the justness of the rejection of the resolution plan by the dissenting financial creditors, the Court held The legislature, consciously, has not provided any ground to challenge the ‘commercial wisdom’ of the individual financial creditors or their collective decision before the adjudicating authority. That is made non justiciable., the Court further held. Insofar as the retrospective applicability of the lowered threshold is concerned the Court noted the contents of the Insolvency Law Committee Report which recorded that, empirical record suggests that the apprehension regarding companies are being put into liquidation by minority creditors is premature and further that the objective of the Code is to respect the commercial wisdom of the CoC. The Court then explicitly held that 2018 amendment having come into force w.e.f. 6th day of June, 2018, will have prospective application and apply only to the decisions of CoC taken on or after that date concerning the approval of resolution plan. Both appeals were dismissed accordingly.

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THE CURIOUS CASE OF THE NATIONAL COMPANY LAW TRIBUNAL, KOCHI

On July 27, 2018, the Ministry of Corporate Affairs issued a notification constituting a bench of National Company Law Tribunal (NCLT) at Kochi. This Tribunal was given jurisdiction over matters from the State of Kerala and the Union Territory of Lakshadweep. Until then, the NCLT at Chennai had jurisdiction over Kerala and Lakshadweep. The notification further stated that it will come into force on the first day of August, 2018. Section 419 (1) of Companies Act, 2013 delegates power to the Central Government to constitute new benches of the National Company Law Tribunal through Gazette notifications. Exercising its powers under section 419(1) of the Companies Act, 2013, the Central Government had earlier, on June 1, 2016, issued a notification constituting 10 Benches of the National Company Law Tribunal. In this notification, Sl.No.6 provided for a Bench of the NCLT at Chennai with jurisdiction over the States of Kerala and Tamil Nadu and the Union Territories of Puducherry and Lakshadweep. The notification of July 27, 2018 modifies this earlier notification and removes State of Kerala and Union Territory of Lakshadweep from Sl. No.6 of the previous notification. The net result is that the NCLT at Chennai has been divested of its jurisdiction to hear matters arising out of Kerala and Lakshadweep. As provided in the recent notification, this change came into force on the first day of August, 2018. Immediately after this notification was issued, the NCLT at Chennai stopped passing final orders in cases from Kerala and Lakshadweep. This includes matters arising out of the Companies Act, 2013, and the Insolvency and Bankruptcy Code (IBC), 2016. Moreover, several cases had been transferred from the Kerala High Court to NCLT Chennai when the Companies Act, 2013 was enacted. The High Court’s jurisdiction under the Companies Act, 1956 was taken away by the new Companies Act 2013. Currently, there are many cases that are pending before the NCLT Chennai, in which pleadings are complete and which are ready for final hearing. These cases include those falling under oppression/mismanagement provisions under the Companies Act, 2013, and those of financial creditors under the IBC. The stand taken by NCLT Chennai, and rightly so, is that pursuant to the notification of July 2018, it does not have any jurisdiction to entertain matters from Kerala and Lakshadweep. In other words, even if the parties subject themselves to the jurisdiction of a particular court, if that court does not have jurisdiction under a statute or the rules thereunder, it cannot adjudicate those matters. It is seen that the Ministry of Corporate Affairs is yet to appoint judicial members and technical members to the NCLT, Kochi. Moreover, it is learnt that the recruitment process for the supporting staff including registrar, deputy registrar, stenographers, etc. is yet to get completed. As such, the NCLT at Kochi is yet to begin its operations, and most likely, it would take another couple of months for the Ministry to appoint the supporting staff and judicial/technical members. The net result is that for the last six months, litigants from Kerala and Lakshadweep have been stranded with nowhere to go. Any prudent person would have first appointed judicial/technical members and the entire supporting staff to the new tribunal before divesting the powers of an already existing tribunal. It is sincerely hoped that the Ministry of Corporate Affairs withdraws this notification with immediate effect so that the litigants from Kerala and Lakshadweep can approach the NCLT at Chennai to address their grievances under the Companies Act, 2013 and the IBC, 2016. Once the selection process is complete and the supporting staff appointed, the Ministry can issue a fresh notification setting up a Bench of the NCLT at Kochi, and transfer all the related cases from NCLT, Chennai to the newly set up bench at Kochi.

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INSOLVENCY PROCEEDINGS AGAINST SIKKA INFRASTRUCTURE SCRAPPED

The National Company Law Tribunal (NCLT)-Delhi has recently ordered closure of corporate insolvency proceedings against Sikka Infrastructure. The Insolvency Resolution Professional (IRP) has also been discontinued to conduct any proceedings The order comes after a plea was made by the financial creditor stating that the matter is amicable settled. The IRP also stated that the expenses have also been settled between the parties. In January, the court had initiated insolvency case against Sikka Infrastructure in relation to a case filed by a home buyer. The buyer who booked an apartment at Sikka Karnam Greens in 2010 and possession was to be offered by March 2015 failing which the builder was to pay compensation of Rs 5 per sq ft per month. The builder later said that the possession will be given by November 2017, which was not the case. The court however did mention that the 300 claims which have been received by the IRP may result in to a spat of the other petitions under Section 7 or 9 of the code, 2016.

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INSOLVENCY COURT DISMISSES STANCHART’S PETITION IN RUCHI SOYA CASE

The Mumbai bench of the National Company Law Tribunal (NCLT) on Thursday dismissed Standard Chartered Bank’s petition to reclassify it as a financial creditor to Ruchi Soya Industries Ltd, stating the lender is too late in seeking such a change. Standard Chartered, which had filed the case on 3 September, is trying to recover $52.5 million (around ₹375 crore) from Ruchi Soya, which is undergoing insolvency resolution. There was a tripartite agreement between Standard Chartered Bank, Ruchi Soya, and its subsidiary Avanti Industries. Under this agreement, Ruchi Soya received the money from Standard Chartered to supply goods to Avanti, and subsequently, Standard Chartered had to collect money from Avanti, Shyam Kapadia, counsel for Standard Chartered, told NCLT. The nature of the debt was working capital and hence it qualifies as financial debt, Kapadia said. The Hong Kong branch of Standard Chartered had given a trade finance facility to Ruchi Soya to supply goods to Avanti and the company had agreed to repay the money along with interest, which is purely a financial transaction, the Standard Chartered counsel argued. Kapadia said that $105 million was disbursed of which $52.5 million is outstanding. However, the NCLT bench of judicial member V.P. Singh and technical member Ravikumar Duraiswamy, in its oral order, dismissed the plea, observing that the resolution professional had called for claims in January but the lender chose to come to court only in September. On Thursday, the tribunal also directed Ruchi Soya’s resolution professional to comply with the Supreme Court order to hold a fresh meeting of the committee of creditors to decide on the resolution plans. NCLT will next hear the case on 5 March after lenders decide on a successful bidder.

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OFFER A SPECIAL WINDOW FOR LARGE STRESSED COMPANIES WITH EXPOSURE OF UP TO RS 1,000 CRORE: ASSOCHAM TO RBI

Within a month of RBI offering a special dispensation to small businesses to defer treating their loans as stressed, industry lobby Assocham Thursday demanded a similar treatment for large businesses as well Its president Balkrishan Goenka has written to the RBI governor, pitching for stressed companies with aggregate exposure of up to Rs 1,000 crore or more to be treated similarly and not categorised as non-performing assets It can be recalled that the RBI's move to create the special dispensation for restructuring the advances to micro, small and medium enterprises had come 10 months after the central bank had officially declared an end to all restructuring in the now famous 12 February, 2018 circular. The move, which was driven by a board decision following a major tiff between the government and RBI, was criticised as being regressive by some quarters. To support mid and large companies and preserving these accounts from within the banking system, it is requested that an adequate policy framework is put in place to address the temporary mismatches Goenka said in letter. He argued that the current economic situation and global macro factors are impacting mid and large manufacturing industries, as well as infrastructure and other companies that are a part of the core sector. This one-time relief to banks will allow one-time restructuring of such viable companies and will not force them to resort to extreme measures under NCLT and resultant liquidation, he said. The ongoing liquidity troubles faced by non-bank lenders and eight of the state-run banks being under the restrictive prompt corrective action framework has accentuated the situation, he said. Claiming that Rs 24 lakh crore in capital is locked, he said banks are lending only to the well rated borrowers, resulting in many projects being kept on hold as alternative financing is not available. The insolvency and bankruptcy code is also not helpful as bulk of these cases are yet to be resolved through the provision, he said. To support such companies and preserving these accounts within the banking system, it is requested than an adequate policy framework is put in place to address the

temporary mismatch and stressed companies with aggregate exposure of Rs 1,000 crore or more are also given protection as is available to MSMEs and they are not categorised as bad loans. It will be a one-time relief which will allow restructuring of viable companies and not expose them to the threat of insolvency resolution and resultant liquidation. The industry lobby said only those companies which have not been admitted to debt restructuring earlier through the CDR or SDR route be made eligible and pitched for a revival of the JLF framework.

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RBI RULES OUT CHANGES IN ONE-DAY NPA RECOGNITION NORMS

Despite incessant demand from a section in the finance ministry, corporates, as well as banks for some leniency in the February 12, 2018 circular that radically changed the bad loan recognitions norms the Reserve Bank governor Shaktikanta Das Thursday ruled out any changes in the same. In their recent meetings with the governor, bankers and industry players had requested some easing in the one-day default norm announced in the February 12 circular, which has massively shot up the quantum of dud loans in the system to 11.5 percent of the system. In fact, it can be recalled that, one of the dozen demands in the three letters that the finance ministry shot off to RBI in October was also a changes in the new NPA recognition norms. And this along with other demands, led to a serious public spar between the government and RBI and finally resulted in the sudden resignation of the then governor Urjit Patel on December 11, 2018. At the moment, there is no proposal to modify the February 12 circular Das told. Under the framework, bankers will have to implement a resolution plan to revive a defaulting company within 180 days. If the plan is not implemented within the stipulated time, the account will have to be referred to NCLT for resolution as per the Insolvency and Bankruptcy Code. Stressed power sector companies had challenged the the February 12 circular in the Allahabad High Court. The court had asked RBI to look at an option to exclude them from the one-day default or offer some special dispensation. These companies alone owe more than Rs 3 lakh crore to the system. but most of the stress is due to external issues like lack of fuel supply linkage after the apex court had cancelled hundreds of coal mines. The RBI not only ruled out any changes but had also challenged the High Court decision in the Supreme Court where the matter is pending now. When asked whether Project Saskhat, which is aimed at resolving stressed assets before going to the IBC, is delaying implantation of the February 12 cases, deputy governor MK Jain answered in the negative. Not at all. The February 12 circular talks of a 180-day timeline whereas Project Sashkat only looks at how to ensure that the process during the 180-day timeline is efficient, Jain said.

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NCLT ALLOWS RUCHI SOYA MGMT TO GET COPY OF RESOLUTION PLANS

The Mumbai bench of the National Company Law Tribunal (NCLT) Thursday directed Ruchi Soya’s resolution professional to comply with the January 31 Supreme Court order and said it will hear the matter from March 5. The NCLT bench headed by VP Singh and Ravikumar Duraisamy, hearing on a petition filed by two of Ruchi Soya creditors–Standard Chartered Bank and DBS Bank, said it will start regular hearing on the matter from March 5. These same lenders had dragged Ruchi Soya to the insolvency court on December 8, 2017. The apex court on January 31 had said the suspended board members of a compaby should be included in all the deliberations of the committee of creditors, including the discussions on the resolution plan. The apex court also said resolution plans should also be shared with the suspended board members The Supreme Court further said every participant in the committee of creditors meetings is entitled to a notice of every meeting and such notice must contain an agenda of the meeting, together with the copies of all documents relevant for matters to be discussed and the issues to be voted upon at the meeting. Setting aside the NCLAT judgement that had refused to give copies of the resolution plans to the suspended directors of Ruchi Soya Industries, undergoing insolvency proceedings, the SC had held that the suspended directors must be given the copies of all resolution plans within two weeks from the date of the judgement. The resolution applicant in each of these cases will then convene a lenders’ meeting within two weeks thereafter, which will include the erstwhile board of directors as participants.

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RTIL EMPLOYEES TO MOVE NCLAT IN TWO DAYS AGAINST LIQUIDATION RULING

The employees of debt-ridden RTIL (formerly Reid & Taylor (India) Ltd) plan to move the National Company Law Appellate Tribunal (NCLAT) in a couple of days, challenging a Mumbai tribunal’s order to liquidate the beleaguered textile major. On Tuesday, the Mumbai Bench of the National Company Law Tribunal (NCLT) had ordered the liquidation of RTIL following a series of unsuccessful attempts to revive the firm. NCLT has not considered Indian Gas’ group companies’ net worth, which is more than Rs. 95 crore. We will move NCLAT within two days, and we will present all the documents before the appellate tribunal, MS Prasanna, General Secretary of RTIL Employees’ Association, told. We are in the process of appointing a senior lawyer.

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INSOLVENCY PROCEEDINGS AGAINST SIKKA INFRA QUASHED BY LAW TRIBUNAL

The National Company Law Tribunal (NCLT) has set aside the insolvency proceedings against Sikka Infrastructure Pvt Ltd, noting that no order was ever passed against the group and all other companies and projects except Sikka Karnam Greens under the Sikka Group remain untouched and unaffected by the issue. The insolvency case was 'disposed off' by the two judges bench at the NCLT ordering inception of the committee of creditors within 30 days of the verdict. The two judges bench comprising Retired Chief Justice MM Kumar and Judicial Member Deepti Kumar passed the order citing, The order dated 23.01.2019 initiating corporate insolvency resolution process against the corporate debtors is closed and naturally the order would not be given effect any further.

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SFIO MOVES NCLT FOR WINDING UP OF IBMA, JPL

The Serious Fraud Investigation Office (SFIO) has filed a petition in the National Company Law Tribunal, Mumbai, for winding up the Indian Bullion Market Association (IBMA) and Juggernaut Projects Ltd., which are being probed in connection with the alleged Rs 5,600 crore National Spot Exchange (NSEL) scam. IBMA is a subsidiary of NSEL and step-down subsidiary of 63 moons, NSEL’s parent company. JPL is one of the exchange’s defaulters. The petition, filed through Ethos Legal Alliance, says IBMA and JPL should be restrained from selling assets and property pending disposal of the petition and seeks appointment of a provisional liquidator. The SFIO in a report last year had recommended winding-up petitions against 17 defaulter companies The ministry of corporate affairs upheld its recommendation in a January 15 order and authorised SFIO to file the petitions.

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FORTIS TO SC: ORDER STOPPING TRANSFER OF RS 4K CR DIDN’T COVER ANY TRANSACTION WITH RHT

Denying any wrongdoing and violation, Fortis Healthcare (FHL) told the Supreme Court on Thursday that its December order restraining it from transferring Rs 4,000 crore it received from Malaysia’s IHH Healthcare did not cover any transaction with RHT Health Trust, Singapore, in which the former promoters of the hospital chain — Malvinder Singh and Shivinder Singh — allegedly had substantial interest till 2017. It said that violation of the Supreme Court’s December 14 order did not arise as the status quo was ordered only with regard to the transaction between FHL and IHH. Besides, it said that as on December 14, IHH had already acquired 31% shares of FHL and the latter had already received Rs 4,000 crore by then. And there was no order restraining FHL from undertaking any acquisition of shareholding/assets or seeking loans from FIs, it said, adding that the hospital chain was not even a party before SC. The order of December 14 does not cover the transaction between FHL and RHT Health Trust through which no controlling stake in FHL is being transferred to IHH. As such, the question of restraining transfer of funds from to RHT does not arise and any such transfer does not go against the order, FHL said in its reply to the application filed by Japanese firm Daiichi Sankyo seeking to restrain any such transfer of funds it received from Malaysia’s IHH Healthcare to RHT Health Trust, Singapore. The order did not bar the transaction between FHL and RHT for purchase of assets, given that the same is being conducted at a level below of FHL, by way of making downstream investment in Indian subsidiaries of RHT and given that no controlling stake in FHL is being transferred to IHH pursuant to RHT transaction, the affidavit stated. Daiichi is attempting to prevent the open offer by wrongly seeking to bring into question the transaction between FHL and RHT Health Trust, which already stands concluded, FHL said. The Singh brothers and their entities have no interest in RHT or its assets nor any money has being transferred to them, FHL said. The number of shares in respect of which the contempt is alleged is 12.25 lakh, which constitute a minuscule percentage which has no impact on the controlling interests, it added. The impugned order is impacting not only its business and also the interests of various public shareholders who stand to benefit from the open offer by Northern TK Venture Pte Ltd (NTK) of FHL’s shares, according to the reply. IHH is also an indirect 100% parent entity of NTK, it said. The acquisition of RHT assets, by way of downstream acquisition of the sale securities of Indian companies is part of the business decision taken by FHL — which was taken with a view towards value accretion and maximization and found favour from IHH and its shareholders as well, it stated. Daiichi had alleged that FHL has received 4,000 crore from IHH Healthcare in India and the same should not be used by the former to re-purchase the assets of RHT Health Trust. The imminent threat and apprehension is that Rs 4,000 crore (received by FHL) is to be paid out to a trust in Singapore, in which the Singh brothers and other judgment debtors had substantial interest till 2017, the Japanese pharma major said. The Supreme Court had on December 14 put on hold the sale of controlling stake (31%) in FHL to the Malaysian company, on a contempt plea filed by Daiichi Sankyo against the Singh brothers. The order for maintaining status quo till further orders of the apex court meant that IHH Healthcare, which had in July won the bidding war for Fortis with its Rs 4,000-crore offer, had to wait and couldn’t have gone ahead with its open offer which was scheduled to commence from December 18. Daiichi Sankyo is pursuing the enforcement of 3,500-crore arbitration award against the Singh brothers pronounced by a Singapore tribunal for concealing information regarding wrongdoing at Ranbaxy Laboratories while selling it to it for $4.6 billion in 2008.

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ESSAR STEEL INSOLVENCY CASE: LENDERS TO GAIN MORE, ARCELOR TELLS NCLT

Defending itself against Standard Chartered Bank from diluting its bid for Essar Steel, ArcelorMittal on Thursday told the National Company Law Tribunal’s Ahmedabad Bench that lenders would gain more from the deal The bank alleged that as against an upfront payment of Rs 42,000 crore, in addition to working capital adjustments of Rs 2,500 crore, the LN Mittal-led firm negotiated its bid downwards in collaboration with State Bank of India-led Committee of Creditors (CoC). The bank said it has been discriminated in ArcelorMittal's resolution plan, which both the firm and the CoC have refuted. ArcelorMittal told the two-members NCLT Bench, comprising adjudicating authorities Harihar Prakash Chaturvedi and Manorama Kumari, contrary to the bank’s claims its resolution plan was openly negotiated by members of the CoC to include an upfront payment of Rs 39,500 crore as well as a guaranteed working capital adjustments worth Rs 2,500 crore. The company said it was committed to passing on any additional working capital accrued with Essar Steel to lenders at the time of acquisition as valued by an independent auditor. Ordinarily a successor gets the working capital but what we did was to give away this working capital to lenders. Other than Rs 42000 crore, I also complied with Supreme Court (SC) ruling to settle dues worth Rs 7000 crore (in Uttam Galva and KSS Petron) as well as infusing Rs 8000 crore as equity, ArcelorMittal's legal counsel told the NCLT bench. However, SCB's counsel's argued that the any such working capital were to be paid to lenders in any case. According to SCB, the request for proposal (RFP) invited for bids had anyway required for working capital adjustments to be stated over and above the upfront payment component. Further, citing a September 26, 2018 letter of CoC's counsel to members, SCB told NCLT that the lenders' committee had admitted that the upfront payment was Rs 42000 crore and not Rs 39500 crore as was being claimed by CoC. Cross arguments between legal counsels of CoC and SCB also took place on Thursday over legality of the manner in which ArcelorMittal's bid was approved and the equitable distribution of commercials in the plan or lack of it. Citing the SC ruling in the recent Swiss Ribbons case where the apex court quoted United Nations Commission on International Trade Law (UNCITRAL) Guidelines, CoC told NCLT that equitable treatment must be ensured between lenders with similar legal rights. However, in the Essar Steel case, SCB was not a lender with similar legal rights as unlike other CoC members who had direct charge or security of ESIL's project assets, it had the latter's pledged shares in one of its subsidiaries instead.

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RBI RATE CUT TO PROVIDE AFFORDABLE CREDIT TO BUSINESSES, HOMEBUYERS: GOYAL

Piyush Goyal on Thursday said the rate cut by the RBI will give a boost to the economy by providing affordable credit to small businesses and homebuyers. The Reserve Bank of India (RBI) has reduced repo rate (at which RBI lends to banks) by 0.25 per cent to 6.25 per cent, a move that will translate into softening interest rates RBI's decision to reduce the repo rate by 25 basis point from 6.5 per cent to 6.25 per cent and change of stance to 'Neutral' will give a boost to the economy, lead to affordable credit for small businesses, homebuyers etc and further boost employment opportunities, Goyal said in a tweet. It was stipulated that no foreign portfolio investor (FPI) should have an exposure of more than 20 per cent of its corporate bond portfolio to a single corporate, including exposure to entities related to the corporate. This was decided as a part of the review of the FPI investment in corporate debt undertaken in April 2018. FPIs were given exemption from this requirement on their new investments till end-March 2019 to adjust their portfolios. While the provision was aimed at incentivising FPIs to maintain a portfolio of assets, market feedback indicates that foreign investors have been constrained by this stipulation. In order to encourage a wider spectrum of investors to access the corporate debt market, the RBI in its sixth bi-monthly policy said, it is now proposed to withdraw this exposure limit.

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AFTER A SURPRISE RATE CUT, SHAKTIKANTA DAS PROMISES MORE IF INFLATION FALLS

The Reserve Bank lowered the policy rate by 25 bps to make the most of the space offered by the softening in prices, and will deliver more on the rate front if its lower inflation estimates are achieved, governor Shaktikanta Das said on Thursday. The surprise 25 basis points rate cut to 6.25 per cent is a measure to broad base credit growth across all the sectors of the economy that's gathering more steam now, the governor said. The favourable macroeconomic configuration that is evolving underscores the need to act now when it is most opportune it is vital to act decisively and in a timely manner to address the objective of growth once the objective of price stability, Das told in the customary post-policy press interaction which was his first after taking over on December 12, 2018. The former finance secretary-turned governor explained that the price stability is defined as keeping the headline inflation number at the mandated 4 per cent in the medium-term and asserted that the Monetary Policy Committee has not done anything beyond the provisions of the RBI Act. When asked if there exists more room for further rate cuts, given the estimate of inflation trending at 3.9 per cent in the third quarter of the next fiscal, Das seemed to reply in the affirmative. Over the next 12 months, if we see that inflation remains at 3.9 per cent, maximum of 4 per cent or below, then I think there is room to act, Das said. He further said the budgetary impacts on fiscal slippage and consequently on inflation numbers have been taken on board while arriving at the new lower inflation targets. Viral Acharya said it will not be fair to assess the rate cut as one delivered in urgency. It can be noted that the RBI had hiked rates twice in quick succession in 2018 but has been cutting its inflation projections ever since, leading to the rate cut Thursday-the first since the middle of 2017. Central banks do move in small steps. We thought that the oil had just eased after the October policy, it was not prudent to withdraw the tightening policy stance right away in December itself, Acharya said. He also decried criticism of RBI's inflation projections being off-the-mark, saying one cannot cherry-pick on one aspect and say the central bank's projections are wrong and claimed that relative to its peers, RBI's projections are not way off-the-mark. The RBI has also initiated steps to improve on its estimates by steps including taking inputs from its regional offices on the movement of food items in local food markets, he said. Acharya also said the RBI does not act with a real rate of interest which is the difference between the rate of inflation and the benchmark lending rate, in mind while setting its policies. On healthcare and education services inflation, where there has been a rise in the past one data release, Das said increase will not be sustained and hinted at the possibility of data showing higher inflation as the NSSO volunteers fanned out deeper into the country for the first time. On the growth front, which the RBI has pencilled in a 7.4 per cent uptick, Das said progress of the monsoons, crude prices and external situation, including the fate of Brexit and trade wars, are the things to watch out for. Das also reaffirmed the RBI's commitment to ensure there is adequate liquidity available in the market saying no sector in the economy will be starved of growth funds.

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RBI FOR INTENSE SCRUTINY ON NBFCS, BUT NO AQR LIKELY

The Reserve Bank of India said it would intensify its scrutiny of the non-banking finance companies to ensure better compliance and financial strength but did not indicate an asset quality review like the one carried out on the banks. NBFCs have been on thick of things and showed high growth taking the advantage of poor financial health of several public sector banks but the recent default by the group firms of non-bank lender IL&FS raised alarm and called for a reality check. Arvind Subramanian suggested asset quality review for these lenders to fully measure the extent of the hidden stress in the system RBI data showed that NBFCs cumulatively had loans assets worth Rs 3.42 lakh crore at the end of September with industry accounting for more than half of total credit extended by them, followed by retail, services and agriculture. The central bank said retail loans of NBFCs grew by 46% during 2017-18 — on top of a growth of 21.6 per cent during 2016-17— reflecting upbeat consumer demand, especially in the vehicle loans segment. Credit to the services sector was driven mainly by commercial real estate and retail trade. An asset quality review, particularly in certain types of exposures of NBFCs, may be apposite, said Vinod Kothari. If there are weaknesses in the credit quality which are better addressed before they become worse, that is much better for the health of the financial system. As is visible, some of the NBFCs have become very large, and we have all witnessed how challenges to the solvency or liquidity of some of them may have ripple effects on the economy, he said. An intense scrutiny assumes importance for the financial system given the fact that banks' exposure to NBFCs is estimated at Rs 5.7 lakh crore

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RBI SLAPS RS 1 CR FINE ON UNION BANK OF INDIA

Union Bank of India on Wednesday said the Reserve Bank of India (RBI) has imposed a penalty of Rs. 1 crore on it for delay in exchange of information regarding the conduct of the borrower's account with other lenders. The penalty has been imposed in exercise of powers vested in RBI under the provisions of the Banking Regulation Act, 1949. The amount of the penalty is not material considering the size of the Bank the public sector bank said in a stock exchange notice. The Bank said it has taken necessary preventive measures and has implemented a comprehensive corrective action plan, to strengthen internal controls and to ensure that such incidents do not recur.

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RBI PERMITS COS PARTICIPATING IN INSOLVENCY PROCESS TO TAP ECB ROUTE

In a bid to facilitate resolution process under insolvency law, the RBI Thursday proposed to permit bidders to raise funds through external commercial borrowing for repayment to the existing lenders. The resolution applicants under Corporate Insolvency Resolution Process (CIRP) under Insolvency and Bankruptcy Code (IBC), 2016 may find it attractive to borrow abroad to repay the existing lenders. In view of the above, it is proposed to relax the end-use restrictions under the approval route of the ECB framework for resolution applicants under CIRP and allow them to utilise the ECB proceeds for repayment of Rupee term loans of the target company, RBI said in a statement. Shaktikanta Das said, resolution under IBC is done by National Company Law Tribunal (NCLT). Our decision gives no room to fly by night operator to bring in money just for the sake of bringing in money. There are other openings of bringing in money, we have ECB route, we have FPI (foreign portfolio investor) route, Das said. It’s a well regulated process and only those companies which have been identified under resolution process will be able to tap this route, he said. RBI statement further said guidelines in this regard will be issued by the end of February 2019. As part of the review of the FPI investment in corporate debt undertaken in April 2018, it was stipulated that no FPI should have an exposure of more than 20 per cent of its corporate bond portfolio to a single corporate (including exposure to entities related to the corporate). FPIs were given exemption from this requirement on their new investments till end-March 2019 to adjust their portfolios. While the provision was aimed at incentivising FPIs to maintain a portfolio of assets, further market feedback indicates that FPIs have been constrained by this stipulation, it said. In order to encourage a wider spectrum of investors to access the Indian corporate debt market, the central bank said, it is now proposed to withdraw the exposure limit. A circular to this effect will be issued by mid-February, 2019, it added. RBI will also come out with draft guidelines by the end of next month to rationalise interest rate derivative regulations. This will help in achieving consistency and ease of access with the eventual objective of fostering a thriving environment for management of interest rate risk in the Indian economy, it said.

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CHANDA KOCHHAR CASE: RBI SAYS LAW WILL TAKE ITS OWN COURSE

In its first comments on the Chanda Kochhar affair involving allegations impropriety while heading ICICI Bank, the Reserve Bank on Thursday said it is for the law enforcement agencies to take an action in the case The role of the regulator is limited to looking at the violations of its regulations by individuals or groups, and act on the same, governor Shaktikanta Das said. If there are certain things which require investigation, that is in the domain of the investigating agencies and it's for them to take further action, he told.

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EEPC INDIA URGES RBI TO ENSURE TRANSMISSION IN POLICY RATE CUT

Complimenting the Reserve Bank of India for announcing a 25 basis points policy rate cut, Ravi Sehgal said on Thursday the banks must be asked to ensure transmission of the reduction in interest rates to borrowers, particularly exporters, who are facing several global challenges besides the rising cost of output. The monetary policy committee itself, in its resolution, has highlighted the global challenges and uncertainties like trade tensions and slowdown in several key economies, an EEPC India press release said. Under these circumstances, the rate of borrowing must come down especially when bank credit to exporters has declined considerably, it said.

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RBI INCREASES LIMIT ON COLLATERAL-FREE AGRICULTURE LOANS TO RS 1.6 LAKH

To boost liquidity in the farming sector, particularly among small and marginal farmers, the RBI on Thursday announced increasing the limit on collateral-free agriculture loans to Rs 1.6 lakh from Rs 1 lakh In 2010, the collateral-free limit for crop loans and term loans was hiked from Rs 50,000 to Rs 1 lakh. The RBI said that move has been taken keeping in view the overall inflation and rise in agriculture input costs since 2010. This will enhance coverage of small and marginal farmers in the formal credit system, the RBI said. It also decided to set up an internal working group to review agricultural credit and address issues such as regional disparity, and extent of coverage, among others. The government has disbursed over Rs 11 trillion of agricultural loans till the middle of December 2018 of which a sizeable chunk — almost 50 per cent — was cornered by Tamil Nadu, Andhra Pradesh, Uttar Pradesh, Punjab, Rajasthan, and Maharashtra. In big states, like Uttar Pradesh, data shows there is wide regional disparity when it comes to availing institutional credit. This will enhance liquidity in the system and will enable farmers to invest more, said Shiraz Hussain, former agriculture secretary. But with banks facing the problem of spiralling non-performing assets (NPAs), expanding the limit of collateral-free loans for the farm sector could hurt them more. The hike in limit was essential for farmers, as the support prices and input costs have gone up. I don’t see this move leading to any spike in NPAs, Mrutyunjay Mahapatra, said. The Indian Banks’ Association (IBA) had earlier this month issued an advisory to all banks to waive the processing, documentation, inspection, ledger folio charges and all other service charges for loans taken against Kisan Credit Cards (KCCs) and crop loans up to Rs 3 lakh. The government has also decided to launch a campaign to bring more farmers under the fold of the KCC with the help of banks. The country has around 6.95 crore KCCs, while the total number of farmer households are estimated to be around 14 crore.

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RBI MONETARY POLICY REVIEW: RISK WEIGHTS EASED FOR BANK LOANS TO NBFCS

The central bank on Tuesday said banks can assign risk weights to exposures they have to non-banking financial companies (NBFCs) depending on ratings given to them by accredited credit rating agencies. At present, bank exposure (rated and un-rated) attracts 100 per cent risk weight. The RBI also decided to harmonise categories of NBFCs and bring asset finance companies infrastructure finance firms and infrastructure debt funds under one category. The central bank said this would cover 99 per cent of the NBFCs and the merger will reduce, to a large extent the complexities arising from multiple categories and provide the NBFCs greater flexibility in their operations. Detailed norms, the RBI said, would be issued by the end of February. The relaxation in risks weights is expected to make credit cheaper for better rated NBFCs. The leeway means banks will be required to hold less capital against loans to some of the better performing NBFCs. Similarly, the banks will have to set aside more capital if they are lending to NBFCs that do not have high ratings. A M Karthik, said: The reduction in risk weights for NBFCs is expected to free up equity capital for banks against their exposures to NBFCs, which the banks can use for incremental credit growth or improvement in their capital ratios. However this (giving more loans to NBFCs) will depend on banks’ willingness to do so, he said. Currently, three categories of NBFCs — asset finance companies, infrastructure finance firms and infrastructure debt funds — have the flexibility to assign risk weights depending on the credit rating of the NBFCs.

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RBI RATE CUT FAILS TO ENLIVEN BOND YIELDS AFTER $100-BILLION G-SEC BLUES

So much for the Reserve Bank of India becoming the first major Asian central bank to cut its benchmark interest rate. The yield on the most-traded 2028 sovereign bonds fell just seven basis points the rupee eked out a gain and the main stocks gauge closed flat on Thursday -- hardly the reaction you’d expect when just 11 of 43 economists surveyed by Bloomberg News predicted the surprise decision. Traders say the $100 billion bond sales unveiled last Friday by Prime Minister Narendra Modi’s government -- a decision that caused the yields on the most-traded sovereign bond to surge by the most in nine months that day -- and the uncertainty about the RBI’s debt-purchase support put a damper on sentiment. Fears about an excessive bond supply and doubts about the OMO support diminished the optimism over the rate cut, said Vijay Sharma. The fear of large supply got reflected in a positive, but muted, market reaction.

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LIKELY TO SEE SOME INTERIM DIVIDEND FROM RBI IN MARCH, SAYS I-SEC PD

A Prasanna, chief economist of I-Sec PD, said it is puzzling that what could have changed from December to February so significantly that the RBI had to lower its inflation forecast. We thought that December forecast was more credible and one would have assumed that all the changes in key variables like oil prices and rupee would have been factored into their December forecast There is going to be some interim dividend in March which means that to that extent, open market operations (OMOs) will come down, he added.

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SBI SLAPPED WITH RS ONE CRORE FINE BY RBI FOR VIOLATING NORMS

State Bank of India Thursday said the Reserve Bank of India has slapped Rs 1 crore penalty on the country’s largest lender for violating norms RBI in exercise of powers conferred under Section 47 A of the Banking Regulation Act, 1949 has levied a penalty of Rupees one crore on the bank for not monitoring the end use of funds in respect of one of its borrowers, SBI said in a regulatory filing. SBI, however, did not share details of the borrower and the loan amount given to the borrower.

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NEW RULE TO INCREASE CAPITAL FLOWS TO NBFCS

In a move to improve liquidity flow to non-banking financial companies (NBFCs) in the country, the Reserve Bank of India (RBI) on Thursday announced that banks assign differential risk-weights to their exposures to NBFCs, based on ratings assigned by credit rating agencies, as against the existing practice of a uniform risk weight of 100%. Prevailing regulations require uniform 100% risk weights on bank exposure to rated, as well as unrated, systemically important NBFCs that don’t take deposits. The move will not only free up capital for banks for further lending—both directly and indirectly—but will also help reduce borrowing costs for well-rated NBFCs, which have been grappling with a systemic liquidity crisis triggered by a series of defaults by Infrastructure Lease and Financial Services Ltd (IL&FS), and its subsidiaries. The alignment of risk weights with credit ratings will facilitate credit flow to better-rated NBFCs, lower the cost of bank borrowings for NBFCs and for the end users, particularly the borrowers of micro finance institutions, RBI governor Shaktikanta Das said. PSU banks have been keen to lend to highly rated housing finance companies and asset finance companies due to the benefit of lower risk weights, but were not too keen to lend to even highly-rated loan companies due to 100% risk weight, said Renu Sud Karnad, managing director, HDFC Ltd. The relaxation will also make banks more amenable to lend to NBFCs. While it is not clear yet if the new guidelines will be applicable retrospectively as well, or fresh loans alone, the move is likely to free up around ₹15,000 crore worth of capital for banks, said Karthik Srinivasan, group head, financial sector ratings, ICRA Ltd. In a way this (alignment of risk weights with credit ratings for NBFCs) is indirect capitalization of banks. Bali added that the flexibility provided will also allow banks to improve their return on capital and pass on the benefits to borrowers as lesser capital will have to be set aside against the loans to NBFCs.

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DESPITE RBI'S RATE CUT, DEPOSIT AND LENDING RATES ARE UNLIKELY TO COME DOWN IN A HURRY

Despite concern over the fiscal deficit and sticky core inflation, the RBI chose to surprise markets and cut its key policy repo rate -- at which banks borrow short-term funds from the RBI -- by 25 basis points to 6.25 per cent The last rate cut by the RBI was in August 2017, when CPI inflation was 3.2 per cent, and within that, food inflation was at 1.96 per cent (inflation had moved up to 5.2 per cent by December that year). While the rate cut and the reversal of stance to neutral suggests that there could be more cuts in the coming year, banks may not be in a hurry to trim deposits, and in turn lending rates. For one, credit has been growing at a faster pace than deposits, exerting pressure on banks’ funding resources. Hence, a cut in deposit rates will be measured, and vary from bank to bank. Two, despite deposit rates moving up for all banks in the last one year, the hikes have been more aggressive in private sector banks, given the higher traction in their loans. Given that credit growth is likely to further inch up for private banks they will be wary about cutting deposit rates in a hurry. Deposit rates for public sector banks are already significantly lower than most private sector banks. This gives them less leeway to trim rates. But whether the Centre nudges PSU banks to make the first move and pass the repo rate cut to borrowers, needs to be seen. Deposit rates for most PSU banks have gone up by 45-50 bps on an average across tenures in the last one year. In contrast, private banks have hiked deposit rates by 75-100 bps over the past year. This is because credit growth for private sector banks has been healthy at 14-15 per cent, while deposits have been growing at single-digits. Hence, private banks have been increasing deposit rates more aggressively (broadly) than public sector banks to fund their credit growth. With this trend likely to continue, the RBI’s rate cut on Thursday may not see private banks trimming deposit rates in a hurry. Hence, lending rates, too, may not come down sharply Data suggests that while private banks have hiked benchmark MCLR lending rates by 60-100 bps in the past year, public sector banks have increased their lending rates by a lower 40-50 bps (SBI though has hiked by 60 bps). There is unlikely to be any sharp fall in these lending rates. While public sector banks continue to grow loans at a slower pace than private sector banks, and possibly have relatively lower pressure on funding resources, they may not tinker with deposit rates much. This is because the rates they offer are already significantly lower than that offered by private sector banks, leaving them little leeway to cut deposit rates. SBI, for instance, offers 6.8 per cent on a 2-3 year deposit, while HDFC Bank offers 7.4 per cent for the same deposits, while Axis Bank and ICICI Bank offer 7.5 per cent. Hence, theoretically, sharp cuts are unlikely unless PSU banks are nudged to toe the RBI’s line and transmit rate cuts to borrowers. At a system level, since the December 2017 quarter, the credit-deposit ratio has been on the rise. Now, at 76-77 per cent levels, a high credit ratio reflects the pressure on banks’ resources -- deploying around Rs 76 or Rs 78 out of every Rs 100 deposit as loans. In such a scenario, the RBI’s rate cuts may take time to be transmitted to the end-borrower.

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EXIT OF BOI, BOM, OBC FROM PCA FRAMEWORK IS CREDIT POSITIVE: MOODY'S

Exit of Bank of India, Bank of Maharashtra and Oriental Bank of Commerce from the RBI's prompt corrective action (PCA) framework is credit positive Moody's Investors Service said Thursday. The banks' net non-performing loan (NPL) ratios and capital -- two of the four parameters that the Reserve Bank of India (RBI) tracks as part of the PCA framework – improved significantly in the quarter ended December 2018, it said. On January 31, the Reserve Bank of India announced it had removed Bank of India (BoI), Bank of Maharashtra (BoM) and Oriental Bank of Commerce (OBC) from its PCA plan after the three public sector banks improved their asset quality and capital, a credit positive, Moody's said in a statement. Exiting the PCA will remove some of the lending restrictions, which the PCA plan imposed, on these banks. However, we do not expect the banks' loan growth to rebound significantly as they are likely to focus on repairing their balance sheets and conserving capital, Moody's added. The banks continue to breach the profitability parameter of the framework, but we expect this to improve gradually, helped by a decline in credit costs. The banks are already in compliance with the leverage ratio parameter.

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INDIA INC CHEERS RBI RATE CUT

India Inc Thursday cheered RBI's move to slash key interest rate by 25 basis points and hoped it would encourage banks to lower lending rates thereby stimulating consumption and investment demand to boost economic growth. The 25 bps reduction in repo rate taken together with the shift in RBI's stance from 'calibrated tightening' to a 'neutral approach', would go a long way in lifting sentiment among businesses, Rakesh Bharti Mittal said. He said the rate cut is in the right direction given that the inflation footprint has been benign for some time. The resumption of rate easing cycle, which is anticipated to bring down banks' lending rates, will provide a fillip to both consumption and investment demand, Mittal said. As per Ficci, which had hoped for a larger cut in repo rate, the 25 bps reduction will be followed up with more such measures in the subsequent months. Sandip Somany said the monetary policy should complement the fiscal policy and strengthen the growth impulses slowly building in the economy.

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NO PLANS FOR DISTRESS-SALE OF ASSETS AS PNB TURNS THE CORNER, SAYS CEO

Punjab National Bank (PNB) will not go in for distress-sale of assets as it has turned the corner, according to Sunil Mehta, MD and CEO. Fortunately, with growth in business and recoveries, now we are in a comfortable position. We are not going for any distress selling If we get any good binding offers we can take a call and go ahead. If we think that people are giving an offer which is not acceptable to us we may not accept it, said the PNB chief, emphasising that the bank has already achieved a milestone for staying afloat. The public sector bank, which was reeling under heavy loss in the past three quarters due to the provisions it had to make on account of the Rs. 14,000-crore letter of undertaking (LoU) scam perpetrated by diamantaires Nirav Modi and Mehul Choksi, turned the corner in the December 2018 quarter, reporting a net profit of Rs. 247 crore. Mehta said: Our former headquarters (at Bhikaji Cama Place), which we are not using, we will sell. The process is already on. We will be able to monetise it in the current quarter itself. We are expecting good upside in the current quarter from IBC resolution, and sale of non-core assets. We have been able to sell non-core assets aggregating Rs. 222 crore (one or two buildings in Delhi that were not being used, and certain investments) till now. And the journey is on. PNB Housing Finance stake-sale process is on. So, the enhanced recovery target for the full financial year is Rs. 26,000 crore, against the earlier target of Rs. 20,000 crore, he added. In the first three quarters, PNB sold seven assets to asset reconstruction companies (ARCs) aggregating Rs. 1,200 crore. In the fourth quarter, it is looking at putting Rs. 1,000 crore on the block.

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BSE TO SUSPEND 7 SUSPECTED SHELL FIRMS FOR FAILING TO COOPERATE WITH FORENSIC AUDITORS

The BSE has decided to suspend as many as seven suspected shell companies from Friday after they failed to provide the information sought by forensic auditors in a time-bound manner. The firms facing suspension are Aadhaar Ventures India, Blue Circle Services, IKF Technologies, Prabhav Industries, S T Services, Silverpoint Infratech and Winy Commercial & Fiscal Services, the BSE said in a circular. The securities of these companies shall be suspended with effect from Friday February 8, 2019, until further notice. The decision comes after these companies failed to cooperate with the audit firms to complete the forensic audit in a time-bound manner. The forensic audit was conducted by independent auditors appointed by the stock exchange on the direction of the markets watchdog.

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BSE COMMENCES COMMODITY DERIVATIVES TRADING IN GUARSEED, GUARGUM

BSE, one of the latest entrants in the commodity derivatives trading space, has launched futures trading in guarseed and guargum Capital and commodity market regulator SEBI last month allowed the exchange to launch futures trading in gold mini, guarseed and guargum futures contracts. Following this, the exchange launched trading in the two agriculture commodities guarseed and guargum. Trading in these commodities has started with a lot size of 10 tonnes. The exchange will have contracts expiring from February to December in both the commodities. A largely export-oriented commodity, guar gum and guar seed prices are driven by global factors. Guar gum prices are linked to crude oil prices as it is largely used in oil well drilling and other industries such as cloth and paper manufacture, explosives and ore flotation. Guar gum is also used as a thickening and binding agent in the food, textile, paper, pharmaceutical and oil industry. Highly refined guar gum is used in the food industry as a stabiliser in ice creams cheese instant pudding and whipped cream substitutes.

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IRDAI ASKS INSURERS TO DIVERSIFY RISKS TO AVOID REPEAT OF IL&FS-TYPE FIASCOES

Following the recent defaults by entities like the IL&FS, the regulator Irdai Thursday said insurance companies will have to think about mitigating their risks by not concentrating their investment in a few entities. The regulator also said insurers need to diversify their investment strategies so the risks faced by them are multi-dimensional. Insurance firms will have to think how they will mitigate their own risks also and must diversify. If they concentrate all risks in a few entities then they will be in trouble, Irdai chairman Subhash Khuntia Khuntia.

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IRDAI IMPOSES RS 9 LAKH FINE ON UNITED INDIA INSURANCE FOR VIOLATIONS

Insurance Regulatory and Development Authority has imposed a fine of Rs nine lakh on state-owned United India Insurance Co Ltd for violating certain procedures The insurance watchdog had issued a show-cause notice in August last year in connection with the on-site inspection conducted by the IRDAI during October, 2015. In conclusion, as directed under the respective charges, the total penalty amount of Rs nine lakh shall be remitted by UIIC by debiting shareholders’ account within a period of 45 days from the date of receipt of this order through NEFT/RTGS (details for which will be communicated separately), the IRDAI said. The IRDAI officials during the inspection found three violations of which two attracted fine. On examining the sample policy files of UIIC, it was noted that the insurer had not recorded justification for the extent of discount given to different clients. The discount given is derived from market forces, as the insurer relies on quotes given by other competitors. In 28 claims, the submission of survey report has been delayed beyond six months, the regulator said. If UIIC feels aggrieved by the order, an appeal may be filed with the Securities Appellate Tribunal as per the provisions of Section 110 of the Insurance Act, 1938.

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CS Meetesh Shiroya