Tag: Finance Ministry

Withdraw directive on AT-1 bonds, SEBI told

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Finance Ministry clarifies that the maturity of all perpetual bonds should be treated as 100 years from the date of issuance for the purpose of valuation

The Finance Ministry has asked market regulator SEBI to withdraw its directive to mutual fund houses to treat additional Tier I (AT-1) bonds as having maturity of 100 years as it could disrupt the market and impact capital raising by banks. SEBI had earlier this week issued regulations that put a limit of 10% for cumulative investments by MFs in Tier I and Tier II bonds. pti

It also clarified that the maturity of all perpetual bonds should be treated as 100 years from the date of issuance for the purpose of valuation.

With new limits, the incremental ability of mutual funds (MFs) to buy bank bonds would be constrained and this would result in increase in coupon rates, the Department of Financial Services said in an office memorandum dated March 11 marked to Sebi chairman and secretary, economic affairs.

“Considering the capital needs of banks going forward and the need to source the same from the capital markets, it is requested that the revised valuation norms to treat all perpetual bonds as 100 year tenor be withdrawn,” the memorandum said.

The clause on valuation is disruptive in nature and instructions that reduce concentration risk of such instruments in MF portfolios can be retained as fund houses have adequate headroom even within the 10 per cent ceiling, it said.

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India’s NEOR network against money laundering to cost Rs 40 crore – Times of India

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NEW DELHI: The National Economic Offence Records (NEOR), a unified database on economic offences, will cost the government Rs 40 crore.
A proposal has been submitted by the Central Economic Intelligence Bureau, the nodal agency under the finance ministry entrusted to manage the databank.
As reported by TOI, the government is preparing a new database, similar to the National Crime Records Bureau, to track all economic offenders and use data analytics to assist enforcement agencies to deal with such offences in a coordinated manner.
An international consultant, hired by the government, recently completed its systems requirement study and submitted the report to the finance ministry.
Sources said the government is taking keen interest in development of NEOR and has already given the task to the National Informatics Centre to complete development of the software in coordination with the finance ministry. The project was initiated in 2019 and is way behind schedule.
The NEOR mandates all agencies — CBI, Customs, ED, I-T, DRI, SFIO, GST Intelligence, EOWs of states — to update case details on a real-time basis once the network is rolled out nationwide.
The web-based portal will disseminate information to grassroot level offices of enforcement and investigative agencies. The new database will help in coordinated nationwide actions by multiple agencies against corrupt officials and corporate houses indulging in financial frauds and money laundering.
According to a senior finance ministry official, the current individual database of these agencies will be automatically incorporated into the NEOR through specific software applications. The NIC is currently working on the project along with the CEIB for development of software and hardware for rolling out the nationwide NEOR network.
The CEIB, which maintains dossiers of economic offenders and suspected tax evaders, has so far made more than 8,500 dossiers of entities engaged in big time money laundering within the country and outside.
“The CEIB periodically reviews the dossiers and seeks updates from concerned member agencies to keep the data base current and relevant. Bureau also has details of over 56,900 offence cases, booked by various agencies,” the official said.
The nodal agency maintains its own Secured Information Exchange Network (SIEN) through which it provides access to other enforcement agencies on cases investigated by others. For instance, in 2018-19, the Bureau had shared around 24,000 intelligence inputs with various enforcement agencies.

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Bank Unions Oppose Centre’s Move to Allow All Private Sector Banks in Govt-related Business

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Bank unions under the umbrella body AIBEA on Wednesday opposed the government’s decision to allow all private sector lenders in government-related business, saying it was “unfair” and “to the disadvantage” of public sector banks (PSBs). The finance ministry, in a statement, said all private sector banks can now participate in government-related businesses like collection of taxes, pension payments and small savings schemes. At the moment, only few large private sector are allowed to conduct government-related business.

“It is like feeding milk to the poisonous snake,” the All India Bank Employees’ Association (AIBEA) said in a release.

This government decision to give equal treatment to private banks is unfair and to the disadvantage of public sector banks, it added. The private sector is the main contributor of banks’ huge bad loans. But there are attempts to hand over nationalised banks to these private sector players, it added. Notably, the government has proposed to privatise two more PSBs after having divested the majority stake in IDBI Bank to LIC in 2019.

AIBEA said the decision to lift embargo on private sector banks to have access to government’s business is “unfair” and needs to be withdrawn. Responding to the government’s assertion that it will allow private sector banks to become equal partners in government business, AIBEA said it is a strange move because unlike PSBs, the private banks are exempted from emphasis on rural branch expansion, rural lending, agriculture loans as well as priority sector loans. While PSBs mobilised 42 crore accounts under Jan Dhan Yojana for the poor people, the private sector banks have opened only 1.25 crore such accounts, it said.

“Why they were not equal partners in this pet scheme of the government. In giving agriculture loans, let private banks compete with public sector banks. In giving education loans to the poor students, will private banks compete. In opening rural branches, let them compete with nationalised banks,” AIBEA pointed out.

C H Venkatachalam, General Secretary, AIBEA, said public sector banks’ social banking obligations have a cost. “Lesser rate of interest on agriculture loans or education loans or MSME, etc has a cost to the banks. Government’s business to these banks helps in cross-subsidisation of the cost. “If the government will distribute their business to private banks, the ability of public sector banks to lend to weaker and priority sectors on concessional rates of interest will become difficult because the government’s business helps these banks to balance the cost,” he said.



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