Banking and Financial Awareness July 2019: Week IV

RBI Launched UTKARSH 2022

RBI Governor Shaktikanta Das launched UTKARSH 2022, a medium-term strategy framework in line with the evolving macro-economic environment in the country.
The framework’s objective is to achieve excellence in the performance of RBI's mandates and improve regulation, supervision of the central bank and to avoid future crisis.
A sub-committee of the central board will periodically monitor its implementation and progress.
In April 2015, A formal strategic management framework was launched to re-articulate the core purpose, values and vision statement of the RBI.

Acharya’s three-year term at the RBI was to end on 23rd January 2020.
He was a strong believer in the central bank’s autonomy and the health of lenders.
According to him, the government must adopt the recommendation of the 14th Finance Commission and the FRBM Review Committee (2016-17) to establish an independent “fiscal council” and fiscal deficit should be contained at 3 per cent of the GDP.

Insolvency and Bankruptcy Board of India (IBBI) tighten norms for resolution professionals with a cap on their age and relative’s involvement.
Now, Resolution professionals cannot take up insolvency assignments once they attain the age of 70.
From January 1 2020, insolvency professionals are eligible to take up assignments only if they have obtained an ‘Authorisation for Assignment’ from an Insolvency Professional Agency (IPA).

The NCLT has asked the company to make additional disclosures to shareholders for proceeding with its sale to Brookfield for Rs 3,950 crore.
The NCLT also warned JM Financial ARC (creditor with 26% shares) of adjudication proceedings against it for failing to comply with takeover norms.
NCLT is a quasi-judicial body established on 1st June 2016 under the Companies Act,2013 based on the recommendation of the Justice Eradi Committee to adjudicate issues relating to Indian Companies mainly for insolvency resolution process of companies.

State Bank of India (SBI) has made an agreement with the New Delhi-based Agri services solutions firm Sohan Lal Commodity Management Pvt. Ltd. (SLCM).
The agreement is made for upkeeping mortgaged commodities as SLCM provides modern and scientific collateral management, warehousing and commodity testing services.
As per this, SLCM will now act as custodian of the SBI’s Agri commodities that it has taken as security against loans.
The SLCM will help in mitigating the risk of the bank by managing the quantity and quality of the collateral.

Now, the Committee of Creditors (CoC) while approving a resolution or deciding liquidation of the corporate debtor, may approve a plan for meeting the liquidation costs.
The CoC may recommend the sale of the corporate debtor or sale of the business of the corporate debtor in the process of liquidation.
The IBBI has also specified the maximum time of 90 days from the order of liquidation for completion of compromise/arrangement.
If the corporate debtor does not have adequate liquid resources to complete liquidation, financial creditors, who are financial institutions, will have to contribute towards the liquidation cost.

The recommendations of the panel were aimed at managing conflict of interest and ensuring independence to proxy advisory firms.
A proxy advisory firm provides voting recommendations on resolutions of listed companies to their minority shareholders.
The panel has suggested that SEBI should be the platform to handle disputes between proxy advisory firms and listed companies.
The panel has said that the board of proxy advisors shall be independent of shareholders to avoid a serious conflict of interests.

RBI has liberalised the External Commercial Borrowings (ECBs) both for corporates as well as non-banking finance companies (NBFCs) lenders for easing liquidity.
ECBs having a minimum 7 years average maturity period can now be availed for repayment of rupee loans availed domestically for capital expenditure and for on-lending NBFCs for the same.
As per RBI, ECBs with minimum 10 years average maturity period can be used for general corporate purposes, working capital purposes and borrowing by NBFCs.