Banking and Financial Awareness July 2019: Week I

Tapan Ray committee set up by RBI to review CIC

RBI has set up a committee to review the regulatory guidelines and supervisory framework of Core Investment Companies (CIC).
Tapan Ray will be the chairman of the working group (of 6 members) who is presently Non-Executive Chairman of Central Bank of India and former Secretary of Ministry of Corporate Affairs.
Suggest changes to the current approach of the Reserve Bank of India towards registration of CIC.
To strengthen corporate governance and disclosure requirements for CIC.
CIC is a Non-Banking Financial Company (NBFC) that is indulged in the business of acquiring shares and securities.
The investment is made in equity shares, preference shares, debentures, bonds, debt or loans in group companies.

Finance Minister Nirmala Sitharaman proposes to start a DD channel exclusively for start-ups announcing the Union Budget 2019-20.
The channel will serve as a platform to discuss issues affecting the growth, funding and tax paying and matchmaking with venture capitalists and investors.
In 2016, the Department of Industrial Policy and Promotion (DIPP) has suggested setting up a channel dedicated to startups to the Ministry of Information and Broadcasting.

The government has decided to give the regulation of the NBFCs to the RBI by announcing it in the budget 2019.
According to the Finance Bill, the RBI can supersede the NBFC Board for a maximum five year period, if the RBI finds that it in the ‘public interest’ or to prevent the affairs of an NBFC whose conducts are detrimental to the interest of the depositors or creditors.
For purchase of high-rated pooled assets of financially sound NBFCs, of not more than Rs 1 lakh crore, the government will provide one-time six months’ partial credit guarantee to PSUs for first loss of up to 10%.
Provided some tax incentives to the NBFCs by treating them on par with banks in relation to Debenture Redemption Reserve (DRR).

Securities and Exchange Board of India (SEBI) has acquired new powers to act against information tampering, leak of data, destroying of regulatory data or unauthorised access to data.
According to the bill, if a person tampers with information, destroys regulatory data, access data in an unauthorised manner then a penalty of up to Rs 10 crore or 3 times the unlawful gains, whichever is higher would be imposed on the entity.
The step has been taken as SEBI was in the midst of probing sensitive data leak through social media platforms, Whatsapp and National Stock Exchange (NSE) case.
SEBI was established in 1988 and got powers and mandate under the SEBI Act,1992.
Its objective is to regulate the securities market and protect the securities investors.

The RBI Board finalised a 3-year roadmap covering its mission and vision for regulation and supervision.
The three-year medium-term strategy- named UTKARSH 2022 has been made for improving regulation, supervision of the central bank and avoid any crisis.
Deputy Governor Viral Acharya anchored an internal committee which was formed to identify issues to be addressed in the next three years.
All central banks across the world strengthen their regulatory and supervisory mechanism by formulating a long-term plan as well as a medium-term plan. RBI has also formulated a three-year plan on the same line.
The RBI is India’s central bank, established on April 1, 1935, under the Reserve Bank of India Act.

Since 2008-2009, 2016-17 was the worst year with the highest amount of money involved in bank frauds.
2016-17 alone had 3927 frauds of amount Rs 25,883 crore.
The frauds mentioned in the list are those involving Rs 1 lakh or more.
The government has already made framework guidelines for frauds, allowing all bank accounts exceeding Rs50 crore to be examined if classified as NPAs.

The government proposed to return the regulatory authority over the housing finance sector from the National Housing Bank (NHB) to RBI.
Investment of Rs. 100 lakh crore is proposed in infrastructure over the next five years.

The Government will work with RBI/SEBI to enable Stock exchanges to allow AA rated bonds as collaterals in order to deepen corporate debt markets.
Trading platforms for corporate bonds will be reviewed to make them more User-friendly.
SEBI to consider raising the threshold from 25% to 35% for a minimum public shareholding in the listed companies.