RBI allows FIIs to hedge investments under ASBA route
MUMBAI: The Reserve Bank today
allowed foreign institutional investors (FIIs) to hedge foreign currency risks
arising out of investment in IPOs made through ASBA route.
"Initial Public Offers (IPO) related transient capital flows under the Application Supported by Blocked Amount(ASBA) mechanism, foreign currency-rupee swaps may be permitted to the FIIs," the RBI said.
Foreign currency rupee swaps for hedging flows under ASBA, RBI said, will be available for 30 days only.
The initiative is likely to facilitate FII investments under the ASBA route into equity market.
Under the Application Supported By Blocked Amount (ASBA) facility, the application money of investors remains blocked in his bank account until the process of allotment of shares is completed.
The Securities and Exchange Board of India (Sebi) had introduced ASBA facility for public offers first in September 2008 when retail investors were allowed to use it.
The facility eliminates any delays related to refunds for the unallocated shares. Initially, it was offered to retail investors only and was given to other investors in 2009.
"Initial Public Offers (IPO) related transient capital flows under the Application Supported by Blocked Amount(ASBA) mechanism, foreign currency-rupee swaps may be permitted to the FIIs," the RBI said.
Foreign currency rupee swaps for hedging flows under ASBA, RBI said, will be available for 30 days only.
The initiative is likely to facilitate FII investments under the ASBA route into equity market.
Under the Application Supported By Blocked Amount (ASBA) facility, the application money of investors remains blocked in his bank account until the process of allotment of shares is completed.
The Securities and Exchange Board of India (Sebi) had introduced ASBA facility for public offers first in September 2008 when retail investors were allowed to use it.
The facility eliminates any delays related to refunds for the unallocated shares. Initially, it was offered to retail investors only and was given to other investors in 2009.
Nabard seeks to end political meddling in co-operative
banks
NEW DELHI: Boards of co-operative
banks controlled by local politicians may come under stricter scrutiny with the
sectoral regulator finding many of them not being run properly. The move has
finance ministry's backing.
"We are pressing for the 'fit and proper' criteria on the elected boards of all banks," said a senior official of the National Bank for Agriculture and Rural Development (NABARD).
Nabard's 2009-10 annual report said nine state co-operative banks (SCBs) and 214 district central co-operative banks (DCCBs) where not being run properly.
Various experts and committees have pointed to the lax overstight of cooperative banks because of multiple jurisdiction of states, the Reserve Bank of India, registrar of cooperatives and in the case of rural ones Nabard as well.
"The fit and proper criteria will ensure that there are at least three professionals on the board with voting rights," said the official. Nabard is closely working with the states and the finance ministry.
The Nabard moves come after the board of the 100 -year-old Maharashtra State Co-operative Bank was superseded by the state government on directions from the Reserve Bank of India.
"One of the major reason for its failure was that the bank was unable to recover its non-performing assets because of political pressure from within the bank board," said a Nabard official. The total NPAs for the bank were at 500 crore in 2010.
Ajit Pawar, senior NCP leader and son of Agriculture Minister Sharad Pawar was one of the board members in the bank. Out of the 44 directors on the bank board, 25 belong to NCP and rest were affiliated with some other political parties.
A finance ministry official said that all steps would be taken so that there are no systemic issues in co-operative banks.
"There is no agenda of the government against individuals. We are pursuing an overhaul in the financial sector through various legislation and reforms," he said.
The sectoral regulator in 2010 had issued fresh guidelines 'on inspection of District Central Cooperative Banks, to ensure that steps are taken by the co-operative banks to induct professionals on their board.
"Nabard will still continue to focus on the financial parameters. But corporate governance practices will determine if they would be eligible for any central support," the finance ministry official said.
"Nabard has initiated training programmes for the board members. Routine on-and-off site inspections have been conducted to ensure all banks are following the norms," said UC Sarangi, ex-chairman Nabard, adding that further stress on corporate governance will strengthen the banks.
"We are pressing for the 'fit and proper' criteria on the elected boards of all banks," said a senior official of the National Bank for Agriculture and Rural Development (NABARD).
Nabard's 2009-10 annual report said nine state co-operative banks (SCBs) and 214 district central co-operative banks (DCCBs) where not being run properly.
Various experts and committees have pointed to the lax overstight of cooperative banks because of multiple jurisdiction of states, the Reserve Bank of India, registrar of cooperatives and in the case of rural ones Nabard as well.
"The fit and proper criteria will ensure that there are at least three professionals on the board with voting rights," said the official. Nabard is closely working with the states and the finance ministry.
The Nabard moves come after the board of the 100 -year-old Maharashtra State Co-operative Bank was superseded by the state government on directions from the Reserve Bank of India.
"One of the major reason for its failure was that the bank was unable to recover its non-performing assets because of political pressure from within the bank board," said a Nabard official. The total NPAs for the bank were at 500 crore in 2010.
Ajit Pawar, senior NCP leader and son of Agriculture Minister Sharad Pawar was one of the board members in the bank. Out of the 44 directors on the bank board, 25 belong to NCP and rest were affiliated with some other political parties.
A finance ministry official said that all steps would be taken so that there are no systemic issues in co-operative banks.
"There is no agenda of the government against individuals. We are pursuing an overhaul in the financial sector through various legislation and reforms," he said.
The sectoral regulator in 2010 had issued fresh guidelines 'on inspection of District Central Cooperative Banks, to ensure that steps are taken by the co-operative banks to induct professionals on their board.
"Nabard will still continue to focus on the financial parameters. But corporate governance practices will determine if they would be eligible for any central support," the finance ministry official said.
"Nabard has initiated training programmes for the board members. Routine on-and-off site inspections have been conducted to ensure all banks are following the norms," said UC Sarangi, ex-chairman Nabard, adding that further stress on corporate governance will strengthen the banks.
Farm schemes to have states in lead role in XIIth plan
NEW DELHI: The agriculture ministry
has decided to drastically reduce the number of central schemes after it found
that most of its schemes, barring a few like the Rashtriya Krishi Vikas Yojna
(RKVY), have become redundant.
The farm ministry thinks only 10 of the 51 existing schemes should be sufficient to take care of the sector. The total outlay for agriculture schemes is 15,034 crore.
"It is true that many of our 51 schemes have overlapping objectives and are not very useful," said a senior official in the agriculture ministry.
"We want to streamline all the schemes to around 10," he said.
The mainstay of agriculture development schemes would continue to be the RKVY and a new variant of the scheme that will focus on infrastructure and agriculture statistics.
The scheme, which currently has the highest allocation of 6,722 crore among all other agriculture schemes, has greater acceptance among states as it provides them with the flexibility to formulate state-specific strategies while being administered from the centre.
The ministry has outlined the restructuring in a 'Proposals for Restructuring and Streamlining Development Schemes for the Twelfth Plan' that has been circulated for comments within the government.
It has said that development programmes often take the initiative away from the states and also micro-manage agricultural development in the states.
The 10 focused and integrated schemes will provide "much wider choice and flexibility to the states and districts," says the ministry.
These 10 schemes will follow the RKVY model. The outlay for RKVY, introduced in 2007, is given as an additional central assistance to states giving them full control of the funds.
The Centre monitors the state initiatives which could span from agro climactic conditions, natural resource issues, technology, livestock, poultry, fisheries, land reforms, etc.
"RKVY has provided a new and flexible platform for routing assistance to states and places the states in the driver's seat in terms of what is best for agriculture in their respective areas," the ministry proposal to planning commission notes.
"Many other schemes that we currently have can easily be merged in RKVY," added the ministry official. The rest of the schemes, as suggested by the agriculture ministry would be 7 mission mode programmes.
Given the vast scope of the scheme and its state-specific nature, more than a third of money for agriculture programmes have gone into the scheme by the end of the ongoing 11th plan (2006-12) and is expected to increase further in the 12th plan (2012-17).
"By the end of the 12th plan, half or even two thirds of the money will have to go to RKVY. The role of other schemes will erode," said planning commission member Abhijit Sen.
With the planning commission working to phase out centrally funded schemes in favour of schemes which provide greater flexibility to states and have proved to be more efficient, other ministries are also expected to follow suit.
Rationalising the number of schemes is an integral part of the approach to 12th plan where the plan panel has to work with limited resources to generate optimal results.
"We are undertaking this exercise to ensure that money is utilized in schemes that work. It is common sense, as one size cannot fit all. We are working on it," said another Planning Commission official. The commission has asked all ministries to examine all their schemes and submit a proposal outlining possible scrapping or streamlining of schemes conceptualized and funded by the central government.
The farm ministry thinks only 10 of the 51 existing schemes should be sufficient to take care of the sector. The total outlay for agriculture schemes is 15,034 crore.
"It is true that many of our 51 schemes have overlapping objectives and are not very useful," said a senior official in the agriculture ministry.
"We want to streamline all the schemes to around 10," he said.
The mainstay of agriculture development schemes would continue to be the RKVY and a new variant of the scheme that will focus on infrastructure and agriculture statistics.
The scheme, which currently has the highest allocation of 6,722 crore among all other agriculture schemes, has greater acceptance among states as it provides them with the flexibility to formulate state-specific strategies while being administered from the centre.
The ministry has outlined the restructuring in a 'Proposals for Restructuring and Streamlining Development Schemes for the Twelfth Plan' that has been circulated for comments within the government.
It has said that development programmes often take the initiative away from the states and also micro-manage agricultural development in the states.
The 10 focused and integrated schemes will provide "much wider choice and flexibility to the states and districts," says the ministry.
These 10 schemes will follow the RKVY model. The outlay for RKVY, introduced in 2007, is given as an additional central assistance to states giving them full control of the funds.
The Centre monitors the state initiatives which could span from agro climactic conditions, natural resource issues, technology, livestock, poultry, fisheries, land reforms, etc.
"RKVY has provided a new and flexible platform for routing assistance to states and places the states in the driver's seat in terms of what is best for agriculture in their respective areas," the ministry proposal to planning commission notes.
"Many other schemes that we currently have can easily be merged in RKVY," added the ministry official. The rest of the schemes, as suggested by the agriculture ministry would be 7 mission mode programmes.
Given the vast scope of the scheme and its state-specific nature, more than a third of money for agriculture programmes have gone into the scheme by the end of the ongoing 11th plan (2006-12) and is expected to increase further in the 12th plan (2012-17).
"By the end of the 12th plan, half or even two thirds of the money will have to go to RKVY. The role of other schemes will erode," said planning commission member Abhijit Sen.
With the planning commission working to phase out centrally funded schemes in favour of schemes which provide greater flexibility to states and have proved to be more efficient, other ministries are also expected to follow suit.
Rationalising the number of schemes is an integral part of the approach to 12th plan where the plan panel has to work with limited resources to generate optimal results.
"We are undertaking this exercise to ensure that money is utilized in schemes that work. It is common sense, as one size cannot fit all. We are working on it," said another Planning Commission official. The commission has asked all ministries to examine all their schemes and submit a proposal outlining possible scrapping or streamlining of schemes conceptualized and funded by the central government.
Govt to allocate Rs 2,500 cr to TUFS for MSMEs
NEW DELHI: The government today said
it will create a Rs 2,500-crore corpus for technology modernisation of the
micro , small and medium units by the next year.
At present, only textiles sector is availing these benefits under the Technology Upgradation Fund Scheme (TUFS) wherein the units get 5 per cent subsidy on loans, for upgrading technology, from the government.
"We are quite hopeful and confident that by this year or certainly by the next year, we will be in a position to create a corpus to facilitate these units for technology upgradation," Uday Varma , Secretary in the Ministry of Micro, Small and Medium Enterprises (MSME) said here at a function organised by management consultant Milagrow.
He stressed on the need to couple upgraded technology with adequate and timely credit.
Besides, Varma said robust infrastructure, innovation, marketing initiatives and skill development programmes are required for the growth of these units.
The MSMEs account for 45 per cent of the country's manufacturing output and 40 per cent of exports. The sector employs 50 million people in 26 million units producing over 6,000 products.
At present, only textiles sector is availing these benefits under the Technology Upgradation Fund Scheme (TUFS) wherein the units get 5 per cent subsidy on loans, for upgrading technology, from the government.
"We are quite hopeful and confident that by this year or certainly by the next year, we will be in a position to create a corpus to facilitate these units for technology upgradation," Uday Varma , Secretary in the Ministry of Micro, Small and Medium Enterprises (MSME) said here at a function organised by management consultant Milagrow.
He stressed on the need to couple upgraded technology with adequate and timely credit.
Besides, Varma said robust infrastructure, innovation, marketing initiatives and skill development programmes are required for the growth of these units.
The MSMEs account for 45 per cent of the country's manufacturing output and 40 per cent of exports. The sector employs 50 million people in 26 million units producing over 6,000 products.
Ficci appoints Rajiv Kumar as secretary general
NEW DELHI: Industry body Ficci today
appointed Rajiv Kumar as the Secretary General of the chamber.
Kumar, a well-known economist and the author of several books, would succeed Amit Mitra , who has become the Finance Minister of West Bengal.
He joined Ficci as Director General in October, 2010. Earlier, he was Director and Chief Executive of an economic think-tank, the Indian Council for Research on International Economic Relations (ICRIER).
"I see this as one of my most challenging assignments, which will not only require my total commitment, but will also serve as a substantial learning experience," Kumar said.
Kumar, a well-known economist and the author of several books, would succeed Amit Mitra , who has become the Finance Minister of West Bengal.
He joined Ficci as Director General in October, 2010. Earlier, he was Director and Chief Executive of an economic think-tank, the Indian Council for Research on International Economic Relations (ICRIER).
"I see this as one of my most challenging assignments, which will not only require my total commitment, but will also serve as a substantial learning experience," Kumar said.
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