A Registered Trade
Union can file insolvency petition as an operational creditor on behalf of its
members: Supreme Court
In
a landmark ruling, the Supreme Court has held that a Registered Trade Union can
maintain a petition as an operational creditor on behalf of its members for the
purpose of Insolvency and Bankruptcy Code. The apex court said, Looked at from
any angle, there is no doubt that a registered trade union which is formed for
the purpose of regulating the relations between workmen and their employer can maintain
a petition as an operational creditor on behalf of its members. The bench
comprised of Justice Rohinton Fali Nariman and Justice Vineet Saran. It allowed
the appeal against the National Company Law Appellate Tribunal (NCLAT) order
which held that a trade union would not be an operational creditor as no
services are rendered by the trade union to the corporate debtor. JK Jute Mill
Mazdoor Morcha issued a demand notice on behalf of about 3000 workers under
Section 8 of the Insolvency and Bankruptcy Code for outstanding dues of
workers. The National Company Law Tribunal (NCLT) dismissed their application.
Upholding the NCLT order, the NCLAT observed that stating that each worker may
file an individual application before the NCLT. The court in its ruling
observed that the Trade Union Is A 'Person' Under The IBC Code Disagreeing with
this approach the bench observed that, a trade union is an entity established
under a statute – namely, the Trade Unions Act, and would thus fall within the
definition of person under Sections 3(23) of the Code. An operational debt,
meaning a claim in respect of employment, could certainly be made by a person
duly authorised to make such claim on behalf of a workman, the court said. It
further observed, Further, a registered trade union recognized by Section 8 of
the Trade Unions Act, makes it clear that it can sue and be sued as a body
corporate under Section 13 of that Act. Equally, the general fund of the trade
union, which inter alia is from collections from workmen who are its members,
can certainly be spent on the conduct of disputes involving a member or members
thereof or for 8 the prosecution of a legal proceeding to which the trade union
is a party, and which is undertaken for the purpose of protecting the rights
arising out of the relation of its members with their employer, which would
include wages and other sums due from the employer to workmen. Filing
Individual Petitions Would Be Burdensome Referring to provisions of the code,
the bench said that a trade union, like a company, trust, partnership, or
limited liability partnership, when registered under the Trade Union Act, would
be established under that Act in the sense of being governed by that Act. Instead
of one consolidated petition by a trade union representing a number of workmen,
filing individual petitions would be burdensome as each workman would
thereafter have to pay insolvency resolution process costs, costs of the
interim resolution professional, costs of appointing valuers, etc. under the
provisions of the Code read with Regulations 31 and 33 of the Insolvency and
Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons)
Regulations, 2016, said the top court.
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Special court summons
Liberty House chief, 3 others in IBBI case
A
special court has summoned Liberty House chief Sanjeev Gupta and three other
senior executives to face a criminal charge pressed against them by the
Insolvency and Bankruptcy Board of India (IBBI) for wilfully breaching the
terms of the resolution plan that it had offered to Amtek Auto. The order
observed that UK’s Liberty House has intentionally and wilfully contravened the
terms of the approved resolution plan. Chairman Gupta, Rajiv Bajaj, CEO Douglas
Dawson and CFO Derek O’Reilly, have been asked to be present in court on July 11
when the next hearing will be held. Liberty House won the bid for Amtek Auto
under the Insolvency and Bankruptcy Code proceedings, and the Chandigarh bench
of the NCLT approved its offer in July 2018. The committee of creditors then
set up a panel to implement the resolution plan. Liberty House Group is willing
to resolve the matter provided it is given a chance to suitably modify its
resolution plan in accordance with corrected information, the statement read.
The IBBI has filed the complaint under Section 74(3) of the bankruptcy code
that provides for such resolution applicants to be punished with either
imprisonment ranging between one and five years, or with a fine of at least Rs
1 lakh, extending to Rs 1 crore, or both. The special court has been constituted
under the Companies Act as per provisions of Section 435(1). In March, LHG was
asked by NCLAT to withdraw its resolution plan for an Amtek subsidiary ARGL as
it had not paid the bank guarantee for the asset, citing similar concerns as
that for Amtek.
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Unitech clients without home or refund write to ministry of
corporate affairs
Homebuyers who have not
received delivery of homes or refunds of their payments from the Unitech Group
have written to the ministry of corporate affairs seeking the removal of
promoter directors from the company’s board for violations of provisions of the
Companies Act. The homebuyers have already filed a motion in Supreme Court for
replacement of the Unitech board with government nominees. The realtor has
failed to hand over more than 14,000 flats to homebuyers after taking deposits
of about Rs 6,700 crore, according to a report filed by an amicus curae in
Supreme Court. Fixed deposits that fell due in March 2015 had not been paid even
after an extension of 12 months granted by the bankruptcy appellate tribunal.
The letter stated that this meant that Unitech founder and chairman Ramesh
Chandra and managing directors Ajay and Sanjay Chandra had ceased to be
directors under the Companies Act, although they continue to be reflected as
directors on the website of the Registrar of Companies. All these defaulting
directors are in jail and it is in the interest of the public that this point
is taken note of by the Registrar of Companies and their names should be struck
off from the list of directors the homebuyers said in the letter. They stated
that the failure of Unitech to call an annual general meeting since 2017-18 is
also against the Companies Act. A new management appointed by the Centre will
be in a much better position to find a solution to the crisis, either by
finding an investor or by selling under-construction projects or by appointment
of NBCC in viable projects, said a homebuyer.
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Essar Steel shareholder moves NCLAT, seeks rejection of
ArcelorMittal bid
An Essar Steel's majority
shareholder on Tuesday moved NCLAT seeking rejection of ArcelorMittal's Rs
42,000 crore bid of the bankrupt company, alleging that its promoter Lakshmi
Mittal hid his association with loan defaulting firms run by his brothers, that
made his firm ineligible to participate in insolvency proceedings. The plea by
Essar Steel Asia Holdings Ltd (ESAHL), which holds 72 per cent shares of Essar
Steel, cames weeks after an insolvency court cleared ArcelorMittal's bid for
Essar Steel, which was auctioned by lenders to recover unpaid loans. In its
plea before the National Company Law Appellate Tribunal (NCLAT), ESAHL alleged
that Mittal was a promoter of GPI Textiles, Balasore Alloys and Gontermann
Piepers - firms run by his brothers Pramod and Vinod Mittal that had been
classified as non-performing assets or bad loans by banks. Insolvency and
Bankruptcy Code (IBC) rules had previously compelled Mittal to shell out an
extra Rs 7,000 crore to clear bank dues of Uttam Galva Steels and KSS Petron
where he held some stake and reportedly sold his holdings in one of them for Re
1 a share. In its petition, ESAHL said Arcelor Mittal India Ltd and its
promoter Lakshmi Mittal had "misled" the Supreme Court, lenders and
insolvency court into believing that they had ceased to have any business
association with Pramod and Vinod Mittal and their companies. It challenged a
sworn affidavit filed by Sanjay Sharma on behalf of Lakshmi Mittal and
ArcelorMittal on October 17, 2018 that stated that there was no business
association between Mittal and/or Arcelor and his brothers and their companies
for more than 20 years and that Lakshmi Mittal and/or Arcelor has no
shareholding in any of the companies where his brothers are promoters,
including GPI Textiles, Balasore Alloys and Gontermann Piepers. ESAHL stated
that these facts make it clear that ArcelorMittal had suppressed and concealed
from the Committee of Essar Steel Creditors and all courts that its promoter
Lakshmi Mittal continued to have business relations with his brothers Pramod
and Vinod and accordingly ArcelorMittal was ineligible to submit a resolution
plan under Section 29A of the IBC. ESAHL alleged that ArcelorMittal was fully
aware of such ongoing business association and consequent ineligibility. And in
order to hide this, Mittal sold his shareholding in Navoday between October 1,
2018 and December 31, 2018 and stopped showing himself as the promoter of the
company. This, it said, was the same tactic that was previously used by
ArcelorMittal to avoid making payment of the overdue debts of Uttam Galva
Steels and KSS Petron and that the Supreme Court had previously held to be
unlawful. Both Gontermann Peipers and GPI Textiles are classified as NPA and
due to an alleged association of Mittal with these companies, ArcelorMittal
would be a related party of these companies, making it ineligible under the
provisions of the IBC, the petition said.
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IBBI files criminal
complaint against Liberty House
The
Insolvency and Bankruptcy Board of India (IBBI) has filed a criminal complaint
against UK-based Liberty House Group for withdrawing after successfully bidding
for Amtek Auto. The IBBI, the regulator for overseeing insolvency proceedings
in the country, filed the complaint on Friday. Liberty House had emerged as the
highest bidder for Amtek Auto but soon backed out citing inadequate information
being provided, which was allowed by the National Company Law Tribunal (NCLT)
after imposing a cost. But the lenders moved the NCLT, alleging that Liberty
House wilfully withdrew. The tribunal in agreement with them said the board may
move against Liberty House as per the regulations laid down under the
bankruptcy code. Section 74(3) of the Insolvency and Bankruptcy Code (IBC) says
that any party that violates conditions laid under the resolution plan is
liable for prosecution and may face a prison term of up to five years with a
penalty of up to Rs 1 crore.
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NCLT gives a second
chance to Ushdev's Singaporean bidder
The
National Company Law Tribunal (NCLT) Monday asked Singaporean investor Taguda
to submit an fresh affidavit giving details of its resolution plan for steel
trading firm Ushdev International that owes Rs 3,450 crore to lenders. The
petition was moved after the lenders, led by State Bank, had rejected Taguda's
resolution plan offering Rs 200 crore of upfront payment within 90 days, of
which 75 percent would go to the lenders and the rest to operational creditors.
The State Bank of India council objected the petition of Taguda seeking the
reasons for rejecting its offer, saying their decision was based on commercial
wisdom and is not open for challenge. We think that we can recover Rs 900 crore
and why should we accept a Rs 200-300 crore bid, the counsel said, adding their
optimism is based on the forensic audit which has not found any fund diversion
by the promoters. He said, 78 percent voted for liquidation, while 22 percent,
including Lodha Financial Services (one of the financial creditors) voted
against it. Meanwhile, Lodha and the workers association of Ushdev have filed applications
against the liquidation. A tribunal bench headed by MK Shrawat put the matter
for detailed hearing on June 3.
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RBI’s
second IBC list: After 20 months, just three assets close to resolution
Of
the over two dozen companies named by the Reserve Bank of India (RBI) in its
second list of large non-performing assets (NPAs), only three — Ruchi Soya
Industries, EPC Constructions and ARGL — have come close to being resolved
successfully through the corporate insolvency resolution process (CIRP) since
August 2017, when the list is known to have been sent to banks. The second list
involved companies with a total principal outstanding of Rs 1.28 lakh crore,
according to a March 2018 report by CLSA. For these three accounts, their
respective committees of creditors (CoCs) have selected successful bidders —
Patanjali Ayurved for Ruchi Soya, Royale Partners for EPC Constructions and
CarVal-Arcil for ARGL. While three other accounts from the list have been resolved
by bankers, the procedure involved was beyond the purview of the insolvency
law. State Bank of India (SBI) withdrew its insolvency petition against Uttam
Galva Steels in November 2018 after a settlement that involved a repayment of
dues by ArcelorMittal. Most banks have sold their exposure to Jayaswal Neco
Industries to Bank of America through Assets Care & Reconstruction
Enterprise (Acre). Exposures to Jai Balaji Industries have been sold to
Edelweiss Asset Reconstruction Company (ARC) by at least four banks at a 63%
haircut, with a 15% cash component being paid upfront. Two assets have gone for
liquidation. One of them is Coastal Projects, for which the liquidation order
was passed in December 2018. The other, Shakti Bhog, is being liquidated under
a Delhi High Court order in a different case and, as a result, was not admitted
for insolvency. A few others, such as IVRCL and Unity Infraprojects, may also
be on their way to liquidation. A bulk of the assets — 15 in all — have been
admitted and are in various stages of the insolvency process. Time overruns
have plagued many of these, with reasons ranging from non-payment by the chosen
bidder in the case of Castex Technologies to promoters not handing over the
company premises to the resolution professional (RP), as in the case of East
Coast Energy. The largest asset on the list — Videocon Industries — was
admitted in June 2018 and resolution plans were to be sent in by October 5,
2018. Some cases are taking longer to resolve as a result of extension of
deadlines for bids by RPs. Banks have turned impatient and have tried to ease
their provisioning burden by palming off some of these assets bilaterally in
exchange for a full-cash payment. These attempts have not always been fruitful.
For its exposure to Jai Balaji, SBI has put out sale notices three times since
October 2017. In 2018, Bank of India put out sale notices for Visa Steel and
Wind World Infra twice. SBI’s plea against Visa Steel is awaiting admission by
the insolvency court. The period of CIRP for Wind World was extended by 90 days
in August 2018, taking it to a total of 270 days. Asian Colour Coated Ispat was
admitted in July 2018 after repeated attempts to sell the asset to ARCs failed.
Data recently released by the Insolvency and Bankruptcy Board of India (IBBI)
showed that admission of cases picked up pace in the March quarter. At the same
time, liquidation has been the most frequent outcome — in 53% of all cases
admitted. Even for assets that saw full resolution, haircuts have been too high
for comfort. In a recent note, Kotak Institutional Equities (KIE) said based on
available data for all 94 cases resolved under the insolvency resolution
process till the end of Q4FY19, financial creditors have faced a haircut of 52%
on admitted claims. This is unlikely to improve even if more second-list
companies get resolved. In its March 2018 note, CLSA had said barring Ruchi
Soya, another 24 assets on the second list would entail haircuts of between 45%
and 90%. Ruchi Soya, for which CLSA had forecast a 33% haircut, is set to cost
its lenders a much higher 52%.
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ABG
Shipyard initiates liquidation process under IBC
Debt-ridden
ABG Shipyard Monday announced commencement of the liquidation process under the
Insolvency and Bankruptcy Code. NCLT vide order dated April 25, 2019 ordered
commencement of liquidation of ABG and appointed. Sundaresh Bhat as the
liquidator of ABG, debt-ridden firm said in a BSE filing. ABG Shipyard is
undergoing insolvency proceedings under the Insolvency and Bankruptcy Code
(IBC, 2016) as per the NCLT orders. An application for initiation of CIRP under
Section 7 of the Insolvency and Bankruptcy Code, 2016 (IBC) filed by the
financial creditor, ICICI Bank Limited, in the matter of ABG Shipyard Ltd was
admitted by the National Company Law Tribunal, Ahmedabad Bench vide its order
dated August 01, 2017 ordering commencement of CIRP, the filing said. Thereafter,
the committee of creditors of ABG approved by requisite voting majority
liquidation of ABG and on that basis, an application under Section 33 of IBC
was filed with the NCLT, it said. ABG Shipyard owes about Rs 17,000 crore to
the lenders.
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Amrapali
promoters siphoned home buyers' money for personal use
Promoters
and top officials of realty firm Amrapali Group diverted homebuyers' money for
personal benefits and building their own empire, said the forensic report
submitted to the Supreme Court. The audit report reveals that around ₹3,500 crore of homebuyers' money was
diverted by the Amrapali top brass. According to the auditors, the money was
spent on houses, luxury cars and weddings among others and also invested in
shares and mutual funds. It is your own doing. You have not done anything. If
you had done anything, this would not have happened. If it is not hand in
gloves then what it is, Justice Mishra told. The forensic auditors' report
pointed to instances where money moved from one company to another company of
the Amrapali Group. The court said that that without the active support of the
banks, this kind of large scale money laundering could not have happened. However,
as per the auditors, it is possible to raise the required funds to complete the
Amrapali projects. For this, they said the money diverted will have to be
brought back and several other assets of the group will have to be sold. A
total of around ₹9,590 crore can be
recovered from the group, noted the auditors
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State Bank of India
shortlists Deloitte as Interim Resolution Professional to manage RCom
State Bank of India (SBI),
the lead banker in Reliance Communications’ asset monetisation plan, has shortlisted
consultancy firm Deloitte as the interim resolution professional (IRP) to manage
the bankrupt telecom operator, despite opposition from some of other lenders,
people aware of the development said. Deloitte has been picked from a list of
30 IRPs, which included Duff & Phelps, RBSA Advisors and BDO, among others,
they told. SBI’s choice may have surprised other members of the committee of
creditors (CoC) since Deloitte’s financial bid for carrying out the resolution
was far higher than that of its competitors, one of the persons cited earlier
said. SBI is expected to propose Deloitte’s name in the dedicated bankruptcy
court on Tuesday. The National Company Law Tribunal is expected to name the IRP
proposed by the CoC, as a first step towards resolving the telco’s debt of Rs
46,000 crore. RCom’s insolvency has been revived in the NCLT after an appellate
tribunal vacated a stay on insolvency proceedings against the telco and its two
units—Reliance Telecom and Reliance Infratel. The telco will be the second
operator after Aircel in the sector to enter bankruptcy proceedings. Aircel,
under a debt of Rs 20,000 crore, is also being managed by Deloitte.
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Company Secretaries to
declare PAN /Aadhaar while paying membership fees/ applying Fellowship
Members would henceforth
be required to declare their PAN (mandatory) and Aadhaar / UID Number
(optional) at the time of making online payment of annual membership fees and
while applying for Fellow membership of the Institute in Form-B. Further,
offline Membership fee / Certificate of Practice fee would not be accepted in
any office of the Institute from 1st June, 2019. Only online fees shall be
accepted from 1st June, 2019 onwards. Members may also note that as per
Regulation 3 of the Company Secretaries Regulations, 1982, they are required to
communicate to the Institute any change in their Professional Address within
one month of such change.
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Jaypee Committee of
Creditors may invite new bids if granted extension
After rejecting Suraksha
group’s bid to acquire Jaypee Infratech, the bankrupt company’s Committee of
Creditors (CoC) is considering inviting more bids now that the National Company
Law Tribunal (NCLT) has permitted the continuation of the resolution process
until the next hearing on May 21. The earlier court-mandated deadline for the
completion of the resolution process would have ended on May 6. However, lead
lender IDBI Bank had moved the NCLT last Monday seeking a six-month extension
of proceedings. If we get an extension from the court, the Committee of
Creditors (CoC) can consider inviting more bids for the group. Else we will
look at the NBCC bid, one of the sources had told this publication. The NCLT
has already granted an extension to the lenders and Interim Resolution
Professional Anuj Jain. On January 28, it had extended the period of the
corporate insolvency resolution process by 90 days as the 180 days mandated
under the Insolvency and Bankruptcy Code (IBC) was coming to an end on February
5, 2019. Under the IBC, a resolution process has to be completed under 180
days, with a further extension of 90 days to 270 days if the process could not
be completed on time. If a company fails to complete the CIRP within the
mandated 270 days, then it will go for liquidation. In case IDBI Bank gets the
NCLT’s nod for the six-month extension it is seeking, it will increase the
chances of Adani Group bidding for the project. The group, the latest to enter
the fray, has already expressed interest in bidding for Jaypee’s real estate
arm in order to strengthen its position in the Delhi-NCR region. Meanwhile, the
CoC will meet on May 9 to review the revised bid of state-owned NBCC Ltd, which
had been shunted aside by the lenders last month due to a lack of approvals
from the government. Now, however, the state-run construction firm has secured
the necessary approvals. To protect lenders interest, NBCC has offered Rs 5,000
crore worth land as well as 100 per cent equity in Yamuna Expressway, the only
cash-generating asset of Jaypee Infratech.
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Tiger Global may back
Sirion Labs; NCLT extends Jaypee Infratech’s bankruptcy process
US-based investment firm
Tiger Global Management is in discussions to pick up a significant minority
stake in software-as-a-service provider firm Sirion Labs, a report citing three
persons in the know. Tiger Global, which has been a major investor in India’s
startup ecosystem and an early investor in Flipkart, began investing again in
the country after three years of inactivity.
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Getting
the CAMEL back on its feet
Every
year throws up new challenges for the banking sector, and FY20 will be no
different. The Q4 results of some banks are out and there are signs that the NPA
recognition process may not yet be over In the past, it was always said that
whenever there is a change of guard in public sector banks, there are
accelerated revelations on the quality of assets that tend to depress the
earnings picture. It is now happening for private banks, too, and, hence, we
may have to wait and see how things transpire during the course of the year. Against
this background, the five pillars of banking that come under the now
conventional CAMEL framework may be debated. Capital is the driving force in
banking, more pertinent for PSBs. This issue has to be tackled head-on in the
current year as the demand for credit should be better since there would be no
disruptive policy. While overall growth projections for the economy are not
very different from that in FY19, credit growth, even if maintained at the
existing level, would call for more capital from banks. In FY18, incremental
capital plus reserves, which forms the core of capital for calculating capital
adequacy, was around Rs 85,000 crore. Of this, only Rs 10,000 crore came from
PSBs. If bank credit grows by 13% in FY20, which is the same as in FY19, then
to maintain a cumulative CAR of 9%, an additional Rs 1.15 lakh crore would be
required. This has to come from either retained profits being ploughed back or
fresh capital infusion. The former looks possible only in case banks are able
to make profits, which implies that there should be no additional provisioning
for bad assets due to the recognition syndrome of the asset quality review
process. While it was generally believed that the worst was over in terms of
legacy NPAs, it needs to be seen if more banks have any such recognition when
the Q4 results are announced. The latter throws the ball back in the
government’s court as weak PSBs need to be recapitalised further in case there
is paucity of the same as of March 2019. The Budget has not made any provision
for such recapitalisation that has to be provided in case the need arises. This
can be included in the formal Budget in June/July. As some of the prompt and
corrective action (PCA) banks will be coming out of the net gradually, the
capital issue would have to be addressed with some urgency. There are talks of
some more PSB mergers, which may not actually add to capital of the system,
though some of the weaker merged banks may look better. There has, however, not
been any mention of divestment, which is understandable as given the present
state of banks, the valuation will not be satisfactory. Asset quality is the
other issue of interest. Have all the past NPAs been recognised? If so, have
provisions been made? This will have a bearing on the P&L accounts of
banks. The other important development will be the way in which banks tackle
the resolution process. The Supreme Court judgment on the RBI circular of
February 12 does not make the one-day default rule lead to the 90-days
resolution channel that subsequently takes the asset to the IBC. It, however,
does not stop banks from still taking such action. If the onus is on the banks,
the question is whether or not they would look at a solution or prefer to kick
the can as was done even earlier before the IBC came in. This will be a call
that has to be taken by the banks. Banks, as a rule, have an incentive to keep
the asset away from the IBC and defer a resolution as it would mean taking a
haircut. At the same time, there is also pressure to show stronger balance
sheets. Hence, there can be an incentive to procrastinate on such resolution. Management
is the third part of the banking outlook for FY20. A lot has been said on this
as it raises issues on governance. This, now, holds for both public and private
sector banks. RBI had a discussion paper on compensation for senior bank
officials and brought in the issue of claw-back for the first time. Therefore,
the way managements conduct business and are held responsible for performance will
be something to be watched carefully. Also, the efficacy of the Banks Board
Bureau would be tested as decisions are taken on the composition of Boards as
well as CEOs. FY18 and FY19 have been particularly challenging for some banks
from the point of view of governance, and it is necessary to have the house in
order for ensuring a safe future of the system. There are lessons to be learnt
from the past and systems have to be made foolproof given that banks are the
fulcrum of the financial system. Unlike FY19, liquidity would be less of a
challenge as growth in deposits is expected to be higher this year. The recent
spate of disruptions in the mutual funds market, especially in the debt
segment, will mean a reverse migration to the ‘safer and lower returns’ haven
of bank deposits. This would be beneficial for banks which had to contend with
sluggish growth in FY19. To the extent that RBI would be there to provide
liquidity through both OMOs and LAF, it would be comforting for banks. In a
declining interest rate scenario, the sixth element of ‘sensitivity to market
risk’ would be less of a concern as securities get valued at higher prices
which will help the P&L. The risk on forex would be there to an extent but
as the rupee is not expected to depreciate by more than 3-4% which is the
trend, there would be less pressure on banks as well as corporates who
otherwise do run a high currency risk on imports and debt. Hence, FY20 will be
a crucial year for banks as the true picture on the internals would be revealed.
The challenge would be to get back from the abyss and move ahead in a
meaningful manner so as to take the banks back to a robust, well-capitalised
system with a cleaner asset portfolio and governance in place.
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Sebi begins probe against
Infibeam's sacked auditor, says report
After ecommerce firm
Infibeam sacked its EY-affiliate auditor SRBC & Co LLP on Sunday, the
Securities and Exchange Board of India (Sebi) has begun a probe against the
auditor based on the firm's complaint. Sources told the paper that the leakage
of unpublished price-sensitive information (UPSI) is a violation of Sebi
insider trading norms and if the claim is found to be correct, then it is a
lapse of auditor responsibility. Currently, the regulator is in the process of
seeking information from the auditor. Sources told the paper that Infibeam also
wrote to audit watchdog National Financial Reporting Authority (NFRA) and the
ministry of corporate affairs (MCA) regarding the leak. Infibeam claimed that
the auditor shared price-sensitive information to third-party and external
email accounts Infibeam asked the auditor to verify the leaks after it received
a complaint on which the firm conducted a forensic audit and found that emails
were sent from company email IDs to a third party and personal email IDs,
people familiar with the matter told the paper. SRBC & Co denied the
charge. We have conducted a comprehensive investigation and stand by our
findings. We are confident of our position and open to third-party/regulatory
investigation and will respond to the regulators, as required, the company
told.
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New insider-trading norms
see cos rush to fortify digital compliance
SEBI’s insider-trading
norms have pushed up the requirement for maintenance of a digital data base for
listed companies and there is a rush for compliance-related software in the
market, experts told. The insider-trading norms which came into effect from
April have forced companies to keep a digital record, which can be audited any
time by the regulator, with regard to generation of unpublished price-sensitive
information (UPSI). According to the new rules, any body found to be holding
UPSI without purpose will be deemed to have indulged in insider-trading. In the
new regime, the onus of compliance with insider-trading norms rests mainly with
the company’s board members, experts say. Simple excel files may not do.
Digital database will have to maintained in a structured manner with adequate internal
controls. It will have to include names of people with whom the UPSI is shared,
nature of the UPSI, and checks such as time stamping and audit trails to ensure
non-tampering of data. There is no room for manipulation of documents or hiding
records, said Dinesh Sharma, that designs compliance-related software. Sharma
says corporates that have so far used technology for business cycle management,
operations improvement, channel management, ERP and HR functions, are now
required to use compliance-related software too. SEBI has been categorical in
its intentions. The guideline says: The board of directors shall ensure that a
structured digital database is maintained containing the names of such persons
or entities, as the case may be, with whom information is shared under this
regulation along with the Permanent Account Number or any other identifier
authorised by law where PAN is not available. In the US when fund manager Raj
Rajaratnam was convicted for insider-trading it was based on investigations that
he had traded on UPSI from company board member Rajat Gupta. This was
established via wire-tapping. In India, even when several corporate bigwigs,
promoters and those connected to the company have been found in possession of
UPSI, SEBI has so far not been effective in holding them guilty of
insider-trading.
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Sebi
panel may recommend FPI investment in unlisted cos
The
Securities and Exchange Board of India (Sebi) committee on the overhaul of
regulations for offshore investors is set to recommend that foreign portfolio
investors (FPIs) be allowed to buy shares of unlisted companies The committee,
headed by former RBI deputy governor HR Khan, is expected to include this
suggestion in its final report, said two people with knowledge of the matter.
Such a measure would be a boost for startups and other unlisted entities as
they will get access to a broader pool of capital. Currently, overseas funders
of startups have to come in through the foreign direct investment (FDI) route
and hence can only be strategic investors in such companies. Allowing FPIs to
buy shares in unlisted companies will help them bring big-ticket investors on
board without having to list on the exchanges. Further, FPIs will be able to
pick up smaller chunks of stakes in unlisted companies, something that’s
typically not done through the FDI route. Until now, any FPI that wanted to buy
shares in such companies had to set up a separate FDI account, said one of the
persons cited above. This would have to be through destinations such as
Singapore. FPIs never showed much interest in unlisted shares in India due to
these complexities involved Until 2013, overseas investors were allowed to buy
unlisted shares under the erstwhile foreign institutional investor (FII)
regulations. Current regulations permit FPIs to invest in ‘to be listed’ shares
and it’s unclear as to what should be the timeline by when these unlisted
shares should get listed for it to fall within the permissible category, said
Tejesh Chitlangi. Allowing FPIs will eliminate this grey area in the regulation
and will also reduce costs for FPIs. The move will align with Sebi’s aim to
allow greater participation of FPIs in the Indian capital market. The idea is
to improve the ease of investing for foreign funds, said one of the persons
cited above. Permitting them to invest in diverse assets under a single FPI
licence would make the FPI route more popular… The proposed changes will need
amendments to some of the RBI norms as well. The Khan committee plans to take
up the issue with RBI in forthcoming meetings, he said. However, while most
hedge funds and broad-based funds have the mandate to invest in unlisted
companies, some pension funds and sovereign wealth funds don’t.
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'Sebi
may be asked to relax 75% promoter stake norm for PSBs'
With
an aim to enable the further recapitalisation of public sector banks (PSBs),
the Finance Ministry may seek a relaxation for PSBs in the market regulator
Sebi's norms for entities requiring promoters to have 75 per cent holdings in
them, according to a senior official source. The Securities and Exchange Board
of India (Sebi) listing norms mandate that every listed entity will maintain a
minimum public shareholding of 25 per cent. The government shareholding in many
state-run banks is currently above 75 per cent. In case of their further
recapitalisation, this will go up over 90 per cent in some cases and also touch
99 per cent. We have taken permission from Sebi on having over 75 per cent
government shareholding in PSBs in the past and if banks are further
capitalised , we will do so again. Already the government stakes are above 75
per cent in many of the state run banks, the source said. Asked if individual
banks will take permission for exemption from Sebi's 25 per cent public
shareholding norm, the source said the ministry seeks the approval from the
market regulator. In fact, the government has plans to cut its shareholding in
many PSBs to 52 per cent. The country's largest lender State Bank of India
(SBI) has already initiated steps for Rs 20,000 crore share sale through
qualified institutional placement (QIP). Post QIP, the government stake will be
diluted from the existing 58.53 per cent.
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NCLT
asks Singapore's Taguda to submit fresh resolution plan for Ushdev
The
National Company Law Tribunal (NCLT) Monday asked Singaporean investor Taguda
to submit a fresh affidavit giving details of its resolution plan for steel
trading firm Ushdev International that owes Rs 3,450 crore to lenders. The
petition was moved after the lenders, led by State Bank, had rejected Taguda's
resolution plan offering Rs 200 crore of upfront payment within 90 days, of
which 75 percent would go to the lenders and the rest to operational creditors.
The State Bank of India council objected the petition of Taguda seeking the
reasons for rejecting its offer, saying their decision was based on commercial
wisdom and is not open for challenge. We think that we can recover Rs 900 crore
and why should we accept a Rs 200-300 crore bid, the counsel said, adding their
optimism is based on the forensic audit which has not found any fund diversion
by the promoters. He said, 78 percent voted for liquidation, while 22 percent,
including Lodha Financial Services (one of the financial creditors) voted
against it. Meanwhile, Lodha and the workers association of Ushdev have filed
applications against the liquidation. A tribunal bench headed by MK Shrawat put
the matter for detailed hearing on June 3. State Bank has initiated insolvency
resolution proceeding against Ushdev, a company which was part of the second
list released by the Reserve Bank last August.
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Jaypee
Infra lenders to mull NBCC revised bid on Thursday
The
Allahabad bench of National Company Law Tribunal (NCLT) has allowed
debt-stressed realty developer Jaypee Infratech’s corporate insolvency
resolution process, which was scheduled to come to an end today (Monday), to
continue until May 21, said two persons with direct knowledge of the
development. The Allahabad bench of NCLT will hear the matter related to extension
of the insolvency process next on May 21. This paves way for the Committee of
Creditors (CoC) to consider state-run NBCC’s revised bid to acquire Jaypee
Infratech at its meeting on Thursday. Financial creditors will discuss NBCC’s
revised bid on May 9. If approved, both homebuyers and lenders will vote on the
same. However, whatever is the outcome, it will still depend on whether NCLT
allows an extension to the insolvency process, said one of the persons
mentioned above.
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IL&FS
saga: NCLAT acts sensibly on RBI
After
getting it wrong in not allowing RBI to order banks to classify their loans to
IL&FS as NPAs the NCLAT appears to have finally seen sense. NCLAT has now
said that while the loans can be classified as NPAs, the banks must make no
attempt to recover their loans till further orders This makes sense since,
while banks would normally try and recover their loans by taking IL&FS to
the NCLT, given how large the loans are—and the likely haircuts—the government
put a new board in place at IL&FS to try and get the best deal possible for
IL&FS debtors; if banks were to be allowed to take IL&FS to NCLAT, the
Uday Kotak-led team wouldn’t get the time it needs to work out an orderly exit
strategy. With the latest NCLAT ruling, banks will now start to make provisions
for IL&FS loans and so, even if things don’t work out according to plan, at
least the banking sector will be better shock-proofed against possible losses
from their IL&FS loans. Indeed, it is to be hoped the Supreme Court (SC)
will also learn a lesson from this as it has, much like the NCLAT, said that
bank loans to Delhi Airport Metro Express Limited (DAMEPL) cannot be classified
as NPAs till it rules on the matter. As FE has argued earlier, DAMEPL may have
valid reasons for why it has not repaid the bank loans it took—it handed back
the airport metro line to DMRC and it has not been paid the damages it was
awarded against DMRC—from a bank’s point of view, all that matters is that the
loan has not been repaid. And even if DAMEPL is to be given time till the other
issues are sorted out, surely banks must make provisions in case things still
don’t get fixed? It is also to be hoped that other NCLAT/SC rulings that hit
RBI and the banking system will also be reviewed. In the case of Essar Steel,
for instance, the resolution is being held up by the NCLAT insisting that the
Committee of Creditors ensure that ArcelorMittal pays a greater amount to
operational creditors who are getting back a much smaller share of their
outstanding in comparison to financial creditors. The SC striking down RBI’s
February 12 circular, similarly, has been a big dampener as far as making
defaulters repay banks. As in DAMEPL, SC seems to be arguing that if faulty
government policy hit firms, they can’t be penalised for not repaying banks;
the point, however, is that banks are not a proxy for government, so they can’t
be penalised either.
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McDonald's,
Vikram Bakshi working on out-of-court settlement
Estranged
partners McDonald's and Vikram Bakshi Monday told the NCLAT that they are working
towards an out-of-court settlement to end their over 5-year-old dispute. Vikram
Bakshi told a two-member National Company Law Appellate Tribunal (NCLAT) bench,
headed by Chairperson S J Mukhopadhyay, that they are trying to work out a
settlement. The bench directed that either of the parties may file an affidavit
including the terms of the settlement being arrived at on the next date of
hearing on May 13. McDonald's and Bakshi had in 1995 signed a partnership
agreement to open outlets of the US fast food chain in India. It was for a
period of 25 years. The two partners had formed a 50:50 joint venture --
Connaught Plaza Restaurant Ltd (CPRL) -- which was responsible outlets of the
fast-food chain in the country's northern and eastern regions through the
franchise route.
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‘IBC
helped creditors recover 195% of liquidation value’
The
creditors of companies that have been rescued from liquidation as of March 2019
have been able to realise 195 per cent of the ‘liquidation value’, said MS
Sahoo. If you get anything above liquidation value, then it is actually a
bonus. This bonus has come because of Insolvency and Bankruptcy Code, Sahoo
told. The correct way, according to Sahoo, to see if creditors have got a good
deal or not in a company that is faced with liquidation, is to compare the
actual value realised with both the value of claim made and also the
liquidation value. Then only a true picture would emerge. For instance, let’s
say my claim as a financial creditor is ₹100
and I get only ₹10. Then my haircut
will look 90 per cent. However, when I get ₹10
for a company whose liquidation value today is only ₹1, then I am getting ten times the
realisable value, said Sahoo. Sahoo highlighted that 370-380 companies have
till March-end been referred for liquidation – 80 per cent of them being BIFR
cases or nothing to realise. So, you have to do haircuts in the case of such
companies, he said.
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SAT
Stays SEBI Orders Against 3 Brokers, 3 NSE Officials
The
Securities Appellate Tribunal (SAT) has stayed orders passed by market
regulator Securities and Exchange Board of India (SEBI) against three
brokerages and three senior officials of the National Stock Exchange (NSE) in
the NSE co-location (Colo) or algo trading scam. However, the Tribunal has
asked the brokers, GKN Securities, Way2Wealth Brokers Pvt Ltd and OPG
Securities to deposit 50% of the penalty amount as security by 20 May 2019. The
SAT also stayed SEBI order on barring three NSE officials from holding any
position in any market intermediaries for two years. Both Way2Wealth Brokers
Pvt Ltd and GKN Securities were barred by SEBI for one year from accepting any
new client. Way2Wealth was asked to pay a fine of Rs 15.34 crore along with an
interest at 12% from 10 September 2015, while GKN was fined Rs 4.9 crore, which
it was required to pay along with an interest of 12% from 11 September 2015.
Separately, the Tribunal has stayed SEBI orders that barred Ravi Varanasi, who
was head of the business development function at NSE, Nagendra Kumar (head of
membership department) and Deviprasad Singh (head of Colo support) for two
years from holding any position with a market player. Next hearing in both
these matters is scheduled for 22 July 2019.
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AMFI
suggests lesser provisioning for secured 'loan against share' papers
The
Association of Mutual Funds in India (Amfi) has issued guidelines to the
industry on how fund managers should write down debt and take haircuts once a
paper falls below investment grade. Haircut is mutual funds writing off the
principal amount and the interest in case of a default. This then reflects in
the net asset value (NAV) of schemes. Amfi has suggested lower provisioning for
secured debt of infrastructure and real estate firms, hotels, hospitals and the
contentious so-called loan against share or LAS paper. According to Securities
and Exchange Board of India (Sebi) guidelines, any security which has a rating
below BBB- is considered to be below investment grade. Due to lack of standard
practices so far on how to treat below investment grade paper, every asset
management company (AMC) and fund manager used to write down or decide on
haircut on their own. This will bring about uniformity in the valuation of
distressed securities across the industry. It also brings about a level of
fairness, as the tendency to delay or defer creating provisions in the hope of
recovery will be contained, said Mahendra Kumar Jajoo. This Amfi direction to
AMCs comes after a Sebi circular on 22 March. The circular asked Amfi and the
valuation agencies – Crisil and Icra Management Consulting Services Limited
(IMaCS) -- to develop a valuation methodology for such paper. The industry body
and valuation agencies are yet to finalise the methodology. In the interim,
Amfi, after working with the valuation agencies, has issued a circular
prescribing haircuts that funds managers should take for such paper. Members
are requested to adopt the attached Standard Hair-Cut Matrix for sub-investment
grade debt securities till such time the valuation agencies compute the
valuation of money market and debt securities classified as below investment
grade, said Amfi in the circular issued on Friday.
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ICICI
Bank Q4 consolidated net profit up 2.45% at Rs 1,170 crore
Private
sector ICICI Bank Monday posted 2.45 per cent rise in its consolidated net
profit to Rs 1,170 crore in the fourth quarter of 2018-19. The bank had
registered a net profit of Rs 1,142 crore in the January-March period of the
preceding fiscal (2017-18). On standalone basis, its profit fell to Rs 969
crore in the March quarter, as against Rs 1,020 crore in the same period a year
earlier. Total income (consolidated) rose to Rs 36,784.25 crore during the
quarter, compared to Rs 33,760.07 crore in year-ago period, the bank said in a
regulatory filing. Net NPAs or bad loans too came down to 2.06 per cent from
4.77 per cent.
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Yes
Bank slips 3 notches to 10th spot as most valued bank
Private
lender YES Bank Ltd has slipped three notches to 10th spot in terms of market
valuation, for the first time, as its shares slumped over 30% in the last four sessions
after the bank reported a surprise net loss in its March quarter earnings. YES
Bank is now the 10th most valued bank from seventh earlier, slipping below
market valuation of state-run lenders - Bank of Baroda and Punjab National
Bank. HDFC Bank Ltd is the most valued Indian bank with a market cap of ₹6.34 trillion, followed by State Bank
of India and Kotak Mahindra Bank with market cap of ₹2.76 trillion and 2.68 trillion,
respectively. Data from BSE showed that Bank of Baroda (BoB) and Punjab National
Bank (PNB) have a market capitalization of Rs.39,720 crore each.
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Over
100 US companies visiting India to explore business opportunities
Representatives
of over 100 American companies are visiting India as part of the US Department
of Commerce's annual trade mission programme, Trade Winds, which started
Monday. Besides New Delhi, the delegation would be visiting Ahmedabad, Chennai,
Kolkata, Mumbai, Bengaluru, Hyderabad, and would meet government leaders,
market experts, and pre-vetted potential business partners during its eight-day
stay in India. Our goal at the US Department of Commerce is to use every
available resource to ensure fair and reciprocal trade for US businesses
selling their products and services all over the world, US Secretary of
Commerce Wilbur Ross said. The US Department of Commerce is hosting the 11th
Trade Winds Business Forum and Mission from May 6-13.
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RBI RELAXES PSL NORMS
FOR HOUSING LOANS FROM RRBS AND SFBS
Individual
housing loan limits for eligibility under PSL raised to Rs 35 lakh in metro
centres and Rs 25 lakh in other centres. In order to bring the RRBs and SFBs at
a level playing field with other Scheduled Commercial Banks, the Reserve Bank
of India has decided to enhance the housing loan limits for eligibility under
priority sector lending (PSL) in respect of RRBs and SFBs for individuals up to
Rs 35 lakh in metropolitan centres (with population of ten lakh and above) and
Rs 25 lakh in other centres, provided the overall cost of the dwelling unit in
the metropolitan centres and at other centres does not exceed Rs 45 lakh and Rs
30 lakh. In terms of the Compendium for SFBs, loans to individuals up to Rs 28
lakh in metropolitan centres (with population of ten lakh and above) and Rs 20
lakh in other centres, were eligible to be classified under priority sector,
provided that the cost of dwelling unit does not exceed Rs 35 lakh and Rs 25
lakh, respectively. Furthermore, the existing family income limit of Rs 2 lakh
per annum eligible for loans to housing projects exclusively for the purpose of
construction of houses for Economically Weaker Sections (EWS) and Low Income
Groups (LIG), is revised to Rs 3 lakh per annum for EWS and Rs 6 lakh per annum
for LIG, in alignment with the income criteria specified under the Pradhan
Mantri Awas Yojana. Accordingly, the RRBs/SFBs are allowed to reckon their
outstanding portfolio of housing loans meeting the revised criteria for
classification under priority sector lending from the date of circular. All
other terms and conditions specified under the Master Direction/Compendium
shall remain unchanged.
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HOME BUYERS TO PROTEST
‘INEFFECTIVE’ IMPLEMENTATION OF RERA ACT
The
Forum for People’s Collective Effort – Karnataka has announced a protest in the
city on May 18 against ineffective implementation of the Real Estate
(Regulation and Development) Act, 2016 in the State. The good thing is that
around 90% of the judgments are in the favour of buyers, but the problem is
with the implementation of judgments. Builders are not honouring K-RERA
judgments. Execution is pending in almost 80% of the cases, he said. The forum
also expressed concern over the lack of progress in bringing unregistered
projects under the RERA net despite repeated complaints. A total of 1,069
projects are still unregistered in spite of being reported by buyers. The
number of complaints pending before K-RERA is 2,372. We have planned a
demonstration to reach out to K-RERA and register our protest against poor
enforcement of the RERA Act in the State and lenient view the authority has
been taking on errant builders and developers, and also to demand speeding up
of enforcement of K-RERA judgments, the forum said in a statement.
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TWO YEARS ON, RERA
STILL FINDING ITS FOOTING
The
Real Estate (Regulation and Development) Act (RERA), 2016 came into force in
its entirety on 1st May, 2017. Although the legislation completed its second
term on Wednesday, it is still evolving as a law. It not only protects buyers’
rights but also helps the real estate sector to grow. It has brought some kind
of discipline in the industry and brought back consumers’ confidence which the
industry lacked for a long time. In the last two years, the legislation has
been helpful in addressing some issues relating to non-delivery of projects,
awarding compensation, making builders disclose their company and project
details, building an ecosystem for overall transparency. RERA also safeguards
home buyers by letting them check a real estate project, residential or
commercial, before they actually buy it. Thanks to an increased transparency,
people can take a right buying decision. RERA regulators play a key role in
interpreting the law correctly and protecting buyers from unfair real estate
practices. Recently, UP RERA rejected 36 applications of developers for
non-compliance of rules. UP RERA chairman said that these projects need to
comply with the rules for registration. Buyers should check whether they are
registered under RERA before buying an under-construction project. RERA is a
buyer-friendly law and clear provisions are given that if a builder fails to
deliver then buyers can cancel and claim refund. We are carrying out forensic
audits under RERA to address the problem of stuck projects. UP-RERA is also
working to create a stress fund to complete stuck projects and get them
delivered, says Balvinder Kumar. RERA, still does not have answers to many real
estate problems and many states, especially in the North-east region, have not
notified the law. Till now, 22 states and 6 union territories have notified
RERA rules, 19 states have active online RERA portals where consumers can
access details related to their real estate projects. Maharashtra is one of the
best performing states as over 19% projects registered with MahaRERA are
complete as on April 30, 2019. The state also boasts of disposing more than 64%
of the total complaints received. Gujarat (5351 registered projects) and
Karnataka (2530 registered projects) are the other two states which have done
well in terms of getting more number of projects registered. West Bengal is the
only state with its own real estate law WBHIRA. There has been a positive
growth across states in terms of registration of new and existing real estate
projects, yet this is still a drop in the ocean. With regard to implementation
of RERA across states, not all have progressed in the same space. Many states
such as Arunachal Pradesh, Assam, Kerala, Tripura, West Bengal, Lakshadweep and
Puducherry have notified RERA rules but they have no portals as yet. On the other
hand, Manipur, Meghalaya, Mizoram, Nagaland and Sikkim have still not notified
RERA rules. West Bengal is at loggerheads with the Centre and has notified its
own RERA, known as the West Bengal Housing Industry Regulation Act, 2017
(WBHIRA), on August 16, 2017. It is being regarded as a diluted law by home
buyers. Experts have cited two major dilutions in key provisions of the RERA in
HIRA. The first is ‘force majeure and the second is on garages. The Centre govt
has told the state, in writing and verbally, to repeal the Act and to conform
to the Central law to prevent ambiguity. Rajasthan has recently appointed its
RERA chairman after one and a half years of its formation. The implementation
of RERA in the state led to the dissolution of small and unregulated builders
who were solely working on cash. Slowdown in the real estate sector also badly
impacted jobs. RERA mainly has three key features -
·
Right
of the buyers,
·
Duties
of promotes and
·
Activities
of agents.
We
need to develop a healthy equation so developers adopt new methods of
construction and delivery of projects. Defect liability of five years has to be
addressed by promoters. We are educating developers to adopt methods as
conventional methods delay delivery of projects, says Velamati Ramnath. RERA
registration across states are on the rise and more and more residential,
commercial and real estate agents are falling under its purview. Project and
real estate agent registrations have been on the rise across most states from
November 2018 to April 2019. For instance, in Andhra Pradesh, as many as 307
projects were registered under RERA as on date – up from merely 61 in November
2018. Maharashtra is currently the most active state having the highest project
registrations with more than 20,718 projects under MahaRERA so far and nearly
19,699 RERA registered real estate agents. Project registrations in Karnataka,
currently stand at 2530 projects and 1342 agents, explains Anuj Puri, Chairman
– ANAROCK Property Consultants. RERA has brought a positive change in the real
estate sector and boosted buyers’ confidence However, the state governments
need to take more initiative in launching RERA portals and provide all
information related to the real estate projects. Buyers who were feeling
helpless earlier can now look up to RERA to resolve their issues and problems.
The success rate of implementation of RERA is improving gradually. In totality,
the mission of RERA is to strengthen the Real Estate sector by providing
solutions to its problems. So there is no looking back and the Indian Real
Estate sector can flourish, adds Parveen Jain. Though RERA made progress in the
last two years yet buyers need answers to issues related to construction of
projects where funds have been diverted by developers, defect liability clause,
computation of delay compensation, extended area cost, definition of ongoing
project etc. Implementation of RERA orders by developers is very important to
keep the buyers’ trust. The law is still silent on many complex real estate
issues and buyers believe they will be incorporated as the law evolves.
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WE WILL PROSECUTE DEFAULTING BUILDERS: RERA CHAIRMAN
Questions have been raised
over the effectiveness of the Real Estate Regulatory Authority (RERA) Act ever
since it was implemented in the state in July 2017. While it took nearly two
years to have a permeant authority with the state government appointing MR
Kamble, a retired IAS officer, as the chairman of RERA Karnataka in March 2019,
the full-fledged implementation of the Act and realisation of its objectives is
still elusive. Kamble admits to the lacunae in the set-up even as he traces the
road map ahead. There is a general perception that RERA-K is partial towards
builders at the cost of homebuyers. What are your efforts to change this
perception? It is wrong to say the authority is partial to builders. We admit
to teething troubles, as the concept of RERA is something new to Indian society
as well as the administrative system. But regulation of real the estate sector
is improving and homebuyers are benefiting. What are the measures to act more
stringently against the erring builders? The Act allows the authority to
prosecute non-compliant builders with our orders and we will start prosecuting
the defaulters. We will also set up a panel of chartered accountants to
scrutinise quarterly updates filed by builders and empanelled engineers will
physically verify the projects. We are planning to have a task force to take
action after conducting spot visits. Data shows builders are cocking a snook at
you. While penalty was imposed on over 800 builders and compensation ordered to
consumers, only a few have complied with the order. Does it not indicate RERA-K
is toothless? It’s not true that only a few builders have paid penalty. In all,
722 of the 821 defaulting builders have paid up. We have collected about Rs
10.9 crore out of the over Rs 15.5 crore penalty imposed. The recovery of
compensation should be done through the revenue department. We have referred
115 cases of non-compliant builders to the district deputy commissioners.
According to available data, there are over 20,000 projects in Karnataka, but
only 3,000 are registered with RERA-K. There are technical glitches on our web
portal where online registration is being done. We are getting a permanent team
from the National Informatics Centre (NIC) to manage and maintain the portal.
We have a team to monitor the advertisements of projects to know whether they
are registered or not.
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REPORT FINDS
SIGNIFICANT DIP IN INITIAL CONSTRUCTION TIME
A
report by real estate data analytics company Liases Foras has found that the time
required to build up to one floor in many projects in Pune has halved in the
two years under the RERA regime. First-floor completion is seen as an important
indicator to judge the pace of a housing project. According to the report, the
time taken from the launch of the project to the completion of the first floor
slab has halved to six months in 2018, from 12 months in 2016. In outer Pune,
the report estimates that the time has fallen to six months from the earlier 17
months. However, most of the complaints that the Real Estate (Regulation and
Development) Act (RERA) deals are still on project delays. Also, not all of the
increase in pace occurred after RERA’s implementation. Some of the momentum was
built even before July 2017. With enforcement of RERA in 2017, builders have increased
the pace of construction in many of their projects in order to avoid
registering these projects under RERA, leading to a sudden jump in floor space
construction in 2017, the report reads. The report shows that 90% more floor
space was constructed in India’s top cities in 2017, when compared to 2016. It
does not make city-specific categorization about the increase in construction.
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TELANGANA HOMEBUYERS IN
LIMBO AS BUILDERS DEFY RERA NORM
Even
nine months after Real Estate Regulatory Authority (RERA) officially came into
existence and five deadlines being given to register infrastructure development
projects, less than 50 per cent of the ongoing project developers in Telangana
have come forward to register their projects with RERA. Despite the lukewarm
response from builders and developers, the Telangana state RERA is giving a
long rope to them by just imposing penalty on the builders. According to
officials, all ongoing infrastructure projects which got approval from the
various government agencies as on January 1, 2017, were to be registered with
RERA before November 30, 2018 without any penalty. There are 4,700 ongoing
projects in the state that should have been registered before November 30 last.
However, as of date, only 2,000 projects have registered themselves with RERA.
Since November last year, the authorities have extended the deadlines for
registrations without any penalty five times. The latest RERA meeting held last
week has decided to give one more chance to builders and developers of ongoing
projects to get their projects registered before May 31 by paying a penalty of
3 lakh for late registration. All applications registered after April 30 this
year have violated provisions of section 3(1) of the Real Estate (Regulation
and Development), Act 2016. All the applications are liable for rejection if
they come now. But the authority has decided to give them one more month, RERA
interim chief and special chief secretary (revenue) Rajeshwar Tiwari said.
#For Source of Information copy and paste the heading in google.
Thanks & Regards,
CS Meetesh Shiroya
Thanks & Regards,
CS Meetesh Shiroya
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