[Akshay Dhekane is a 5th year B.A., LL.B. (Hons.) student at National Law University Delhi] In the Indian markets, hostile takeovers are a potent but rare strategy to gain control over companies. Recognizing their importance the Supreme Court in Pramod Jain v SEBI held: “A hostile takeover helps to unlock the hidden value of the shares and puts pressure on the management to work efficiently”...
RBI Bans Loading of Prepaid Payment Instruments From Credit Lines
[Manasi Chandriani Shah is a Solicitor (B.I.L.S)] Fintech entities, wallet providers, and non-banking financial companies have been mandated to pull the chains on all existing arrangements to facilitate or extend loans through prepaid payment instruments (“PPI”), including cards and wallets. Extending a credit line through any PPI has been prohibited by the Reserve Bank of India (“RBI”). This ban...
Cutting Corners through RBI’s Special Liquidity Scheme
[Shreya Dagar is a 3rd year B.A., LL.B. (Hons.) student at National Law University Jodhpur] In order to provide relief to non-banking finance companies (“NBFCs”), housing financing companies (“HFCs”) and microfinance institutions against the pandemic struck economy, the Government has approved a special liquidity scheme providing short-term liquidity to these entities. Earlier, the Reserve Bank...
Open Banking Standard in the Indian Context
[Kishan Gupta is a B.A. LL.B. (Hons.) student at Dr. RML National Law University, Lucknow and Managing Editor of the RMLNLU Arbitration Law Blog] Understanding Open Banking Standard Until now, the names of large banks like SBI, ICICI and PNB were considered synonymous with custodian of customer’s financial data. Generally, these traditional banks store customer’s financial information for their...
Chief Risk Officer: Strengthening Risk Management Practices
[Kanakprabha Jethani is with Vinod Kothari Consultants Private Limited] The Reserve Bank of India (RBI) issued a notification on 16 May 2019 requiring non-banking finance companies (NBFCs) having an asset-size exceeding the prescribed threshold to appoint a Chief Risk Officer (CRO) with clear roles and responsibilities to oversee their risk management practices. The CRO shall be required to...
Securitization and Direct Assignment Transactions in the Indian Economy
[Vineet Ojha is Manager – IFRS & Valuation Services at Vinod Kothari Consultants Pvt Ltd] The current financial year has witnessed a sharp surge and a life time high in the volume of securitization and direct assignment transactions in the Indian economy. Consequent to the funding problems that non-banking finance companies (NBFC) and housing finance companies (HFCs) have been facing...
Prompt Corrective Action
[Manal Shah is a B.A. LL.B. (Hons.) student at the National University of Advanced Legal Studies, Kochi and writes at thesecuritiesblawg.in] Prompt corrective action (“PCA”) is intended to “intervene early and take corrective measures in a timely manner, so as to restore the financial health of banks that are at risk by limiting deterioration in their health and preserving their capital levels”...
RBI Directions on Peer to Peer Lending
[Guest post by Samrudhi Chothani, an Associate at Bharucha and Partners, Mumbai and Saurav Roy, a IV B.A.LL.B student at the ILS Law College, Pune. Views are personal] Introduction The Peer to Peer (“P2P”) Lending sector is one with tremendous potential and requires robust regulation. P2P lending is similar to crowd-funding, where persons who want loans are connected with interested lenders. The...
Regulation of invoice discounting start-ups: Is RBI proposing a disproportionate regulation?
[The following guest post is contributed by Srinivas Medisetty, who is presently working as a legal counsel in Ola (ANI Technologies Private Limited) advising on the regulatory and litigation aspects of the company. Views expressed are personal.] The Securities and Exchange Board of India (“SEBI”) as the capital market regulator rightly stepped in to regulate crowd funding through investment in...
Liberalization of RBI’s Policies
The Reserve Bank of India (RBI) last week issued a series of circulars liberalizing and streamlining its policies on various types of equity investments as well as on external commercial borrowings (ECBs). The key pronouncements are highlighted below: 1. Foreign Investment in “Other Financial Services” In the case of non-banking finance companies...
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