ArchiveSeptember 2008

Some thoughts on the NBFCs Auditors Report Directions 2008 – II (concluded)

(second and concluding part) Having considered some basic concerns, let us consider a few areas relating to the 2008 Directions. Essentially, the requirements are just a few if one groups them. The Auditors are required to report on compliance generally relating to registration. For example, has the NBFC registered itself with the Reserve Bank of India if it is required to do so? The reverse...

Some thoughts on the NBFCs Auditors Report Directions 2008 – I

Recently, as briefly referred to an earlier post here, the Reserve Bank of India has notified the NBFCs Auditors’ Report  (Reserve Bank) Directions 2008 (“2008 Directions”) (full text available here). These replace similar directions issued exactly a decade back, i.e., in 1998. Both these Directions require auditors of non-banking financial companies (“NBFCs”)...

Now even non-deposit accepting NBFCs of asset size of Rs. 50 crores subject to reporting to RBI

Reserve Bank of India issued on 24th September 2008 (see here) certain reporting requirements for certain non-deposit accepting non-banking financial companies (NBFCs). What is important though is that these will be applicable to such NBFCs of asset size Rs. 50 crores but less than Rs. 100 crores. Though such entities are not given the status of “Systemically Important” NBFCs, effectively, it is...

FCEB Scheme Operationalised

In February this year, the Government (Ministry of Finance) had issued a notification introducing Foreign Currency Exchange Bonds (FCEBs) that offered Indian companies an additional avenue to raise finances from overseas. We had discussed the implications of FCEBs in a post at that time. Now, the RBI has issued a circular operationalising the scheme paving the way for issuance of FCEBs. One issue...

Recent Comprehensive Directions by RBI to Auditors of Non-banking Financial Companies

The Reserve Bank of India has issued, vide its circular dated 23rd September 2008, comprehensive and updated directions to auditors of non-banking financial companies (NBFCs) (posted here on the Reserve Bank of India website) requiring them to specifically answer many questions relating to NBFCs. These 2008 Directions replace the decade old 1998 Directions to auditors. The Directions are in a way...

Nationalisation of Large Corporations

An interesting column in the Economic Times by Swaminathan S. Anklesaria Aiyar looks at the biggest government takeovers in history: “Socialists, like Hugo Chavez in Venezuela or Indira Gandhi in India, are famous for nationalising the biggest corporations. But the US government has taken over three of its biggest corporations within two weeks. Has the US turned socialist? American right-wingers...

History Repeats Itself: Whither Governance? (Part 3)

In two previous posts (here and here), we discussed the several corporate governance issues that have been accentuated on account of the current financial turmoil emanating from the U.S. In this post, we examine some of the differences between corporate structures and governance in the U.S. and India. In India, companies predominantly display concentrated shareholding structures (as opposed to...

History Repeats Itself: Whither Governance? (Part 2)

In the background of the boardroom failures discussed in the previous post, it is useful to explore some of the factors involving U.S. corporate governance that may have led to this situation. 1. Dispersed Shareholding and Lack of Oversight One of the key problems involving a dispersed shareholding model (that is prevalent largely in the U.S. and U.K.) is that the individual shareholders have...

History Repeats Itself: Whither Governance?

Much has already been stated in the press about the current financial crisis that has rocked not only the U.S. economy, but also the global financial system, and indeed the magnitude of this crisis will ensure that a lot more will be said in the future. Here we focus on one aspect of the crisis, which is the perceptible failure of corporate governance involving large companies. In a provocatively...

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