SEBI allows bourses, PEs, VCs to list
Market regulator SEBI has allowed stock exchanges and some specified alternate investment funds (AIFs), such as private equity funds and venture capital funds, to list on the bourses with some riders.
In a wide ranging reform, SEBI has also brought all Indian AIFs, including PEs and VCs, under its ambit of inspection and investigation, and said all these funds have to register with the regulator now.
This could pave the way for the listing of stock exchanges such as BSE and NSE.
SEBI has also accepted, in parts, the much-controversial Bimal Jalan Committee report, but rejected one of its main recommendations—of not allowing stock exchanges (SEs) to list on the bourses.
The Jalan committee had recommended that no exchange should be allowed to list on the bourses, a point that raised protests from several quarters. SEBI, however, clarified that SEs will be allowed to list only after three years from the date of approval by the regulator. It also allowed a depository to list, but not a clearing corporation (CC), mainly because of the latter’s high operational risks.
The Jalan Committee report, while defining the magnitude of profit an SE can make, had said their profits should be capped. The SEBI board said that to bolster the risk management capacity of corporation, a SE will have to transfer 25% of its profits to the settlement guarantee fund (SGF) of the CC where its trades are settled. An SGF works as a buffer which can be used by a clearing corporation in case some broker or investor fails to meet their commitment of funds during the settlement. The bigger the SGF of a clearing corporation, the more robust is the whole trading and settlement mechanism of a bourse.
On the issue of holding structure, SEBI has allowed other SEs, depositories, insurance companies, banks and public financial institutions to hold up to 15% in an SE, while all other types of entities can hold only up to 5%.
The regulator also gave a road-map for defunct stock exchanges, several of which are currently in existence, to exit completely from the business. It also suggested how the members of defunct exchanges can continue to remain in the business of stock broking, by being members of fully operational pan-India bourses like NSE and BSE.
On the regulation of AIFs, SEBI said that all these funds, whether operating as a PE fund, a real estate fund or a hedge fund, must register with the regulator under its AIF Regulations, which will replace the existing SEBI (Venture Capital Funds) Regulations, 1996.
RBI cuts rate
On April 17, 2012, Reserve Bank of India Governor Duvvuri Subbarao surprised the market with a sharp 50-basis point reduction in the repo rate to boost economic growth, but warned there was limited scope for further cuts.
The first rate cut in three years cheered investors and companies, with bond yields and swaps rates falling sharply and stocks extending gains, although the rally was capped by expectations there would be few further cuts, at least in the near term.
The RBI also said, “The economy is likely to revert close to its post-crisis trend in FY13, which does not leave much room for monetary policy easing without aggravating inflation risks.”
The RBI, however, left unchanged the Cash Reserve Ratio (CRR), the share of deposits that banks must hold with the central bank, at 4.75 per cent. The ratio had been cut 125 basis points since January to ease tight market liquidity.
The central bank said its baseline expectation for gross domestic product growth in the fiscal year that would end in March 2013 was 7.3 per cent, compared with an expected 6.9 per cent in the just-completed year. It expects headline inflation to end the year at 6.5 per cent, with little deviation expected during the year.
Sluggish capital investment has exacerbated bottlenecks in the Indian economy, bringing down its capacity for non-inflationary growth to an estimated seven per cent, from 8.5 per cent before the global financial crisis. The announcement came with a thinly veiled warning to the government that more progress was needed on fiscal policy and reform. Subbarao reiterated the need for the government to cap its subsidy burden, which led to a bloating of the fiscal deficit in the recent fiscal year to 5.9 per cent of GDP.
RBI has also increased MSF borrowing limit. Banks can now borrow up to 2 per cent of net demand and time liabilities from the Marginal Standing Facility (MSF).
RTE Act applies to all schools, rules SC
On April 12, 2012, the Supreme Court upheld the constitutional validity of the Right of Children to Free and Compulsory Education (RTE) Act (2009) and ruled that the law would apply uniformly across India to all private and minority schools which get grants from the government. All unaided private schools are also covered under the Act, with the exception of unaided private minority schools.
All schools covered by the law will now have to compulsorily reserve in Class I (or nursery at entry level) at least 25 per cent seats of the total strength of that class for children belonging to weaker sections and disadvantaged group in the neighbourhood.
The SC’s order came on a bunch of petitions filed by private unaided institutions which argued that the law violated their rights under Article 19(1) (g) of the Constitution which provided them the autonomy to run institutions without government interference.
The apex court said the law should be viewed as child-centric and not institution-centric. The court also ruled that the law will apply prospectively.
Schools reserving 25 pc seats will be reimbursed expenditure to the extent of per-child-expenditure incurred by the State as a whole or the actual amount charged from the child, whichever is less.
Anand Marriage Act gets Cabinet nod
Sikh couples will soon be able to get their marriages registered under the Anand Marriage Act, 1909, instead of the Hindu Marriage Act, 1955. Accepting the long-standing demand of Sikhs, the Union Cabinet, on April 12, 2012, approved amendments to the Anand Marriage Act, 1909, to provide for registration of Sikh marriages.
The Cabinet has also approved the introduction of a Bill to amend the Registration of Births and Deaths Act, 1969, to include registration of marriages as well. The move aims at utilising the existing administrative mechanism to maintain marriage records on the lines of records of births and deaths. The amendment would allow couples to get their marriages registered independent of their religion, though the option of getting marriages registered under the Hindu Marriage Act and the Special Marriages Act would continue.
So far, marriages amongst Sikhs, Hindus, Jains, Buddhists and other communities, except Muslims, Christians, Parsis and Jews, were covered under the Hindu Marriage Act.
Illiteracy costs India $53 billion every year
A report titled, “The Economic and Social Cost of Illiteracy: A Snapshot of Illiteracy in A Global Context”, published by the World Literacy Foundation and released to coincide with the World Literacy Summit, has revealed that illiteracy is costing the world economy a massive $1.19 trillion each year. Of this, the Indian economy alone is losing $53.56 billion annually, lesser only to China, which is losing $ 135.60 billion.
The report assesses functional illiterates which UNESCO defines as “people who can read and write simple words but can’t apply these skills to tasks such as reading a medicine label, balancing a cheque book or filling a job application”.
The research highlights the social and economic impact of a person’s inability to read and write. It reveals that more than 796 million people globally cannot read and write. About 67 million children don’t have access to primary school education and another 72 million miss out on secondary education.
It calculates the cost of illiteracy to a developed nation at 2 per cent of its GDP, while the loss to an emerging economy like India and China would be around 1.2 per cent of the GDP, and to a developing country 0.5 per cent of the GDP.
Calling for ways to bring children to schools and retain them, the Report says that illiterates earn 30 to 42 per cent less than their literate counterparts as they don’t have the literacy skills required to undertake further vocational education training to improve their earning capacity.
The report also establishes a link between illiteracy and crime saying majority of prison inmates across the world have poor literacy skills. Also amongst juvenile delinquents, up to 85 per cent are functionally illiterate.
Visit of President Zardari of Pakistan
Dubbed as ‘Dargah Diplomacy’, Pakistan President Asif Ali Zardari’s day-long private visit to India on April 8, 2012, to offer prayers at the Ajmer Sharif, did help the two South Asian neighbours reduce mutual tension and consider practical ways to speedily settle some of the less contentious issues such as Sir Creek and Siachen.
At his one-on-one meeting with Zardari, Prime Minister Manmohan Singh, however, made it a point to highlight the issue of terrorism upfront and unequivocally told the Pakistani leader that action must be initiated against JuD chief Hafiz Saeed and other perpetrators of the 26/11 Mumbai attack.
Reflecting the view of Islamabad, the Pakistan President said the issue of Hafiz Saeed, on whose head the US recently declared a bounty of $10 million, needed to be discussed between the Home/Interior secretaries of the two countries, who would meet shortly in Islamabad. He also stated that there were legal processes in Pakistan without going through which the civilian government could not move against the masterminds of the Mumbai attack.
But for the first time perhaps, Islamabad indicated that it was seriously looking at the India-China model of bilateral relations, wherein the two countries have put contentious issue on the backburner and made significant gains in their trade and commercial ties.
There was also a mention of the liberalised visa regime that the two countries desire to usher in. The two leaders observed that an accord could be signed when the Home/ Interior secretaries meet.
After the talks, the Prime Minister hosted lunch in honour of his guest and his delegation. Zardari and his entourage later left for Jaipur on way to Ajmer, where President Zarsari offered prayers at the historic 13th century Dargah of Sufi saint Khwaja Moinuddin Chisti, after which a $1 million donation for the shrine was announced.
Visit of President Pratibha Patil to Seychelles
Seeking to take its relations with Seychelles to new heights, India, on April 30, 2012, during the visit of President Pratibha Patil to the country, announced a USD 75 million financial package for the country and agreed to train police personnel in the strategically located Indian Ocean archipelago, affected by piracy.
After her “very fruitful” talks with her Seychelles counterpart, James Michel, President Pratibha Patil said that India would extend USD 50 million Line of Credit and a grant of USD 25 million to this island republic.
Hailing the visit of Patil, the second Presidential visit from India after 22 years, as “historic”, President Michel said that “Seychelles has positioned itself as a rock of dependability for India in the Indian Ocean region. India can always count on Seychelles and I know that we can always count on India. We share a strategic partnership and also a natural partnership.”
A major feature of the visit was President Patil’s address to the National Assembly of Seychelles. She became the first President of any country to address the Assembly.
Historic polls in Myanmar
On April 3, 2012, democracy champion Aung San Suu Kyi’s party won almost all the seats it contested in Myanmar elections, becoming the main opposition force in the national Parliament.
The veteran dissident’s National League for Democracy stormed to victory in 43 of the 44 constituencies where it fielded candidates.
The landslide win in the bye-elections gave Suu Kyi her first-ever seat in Parliament, although it will not threaten the comfortable majority of the military-backed Union Solidarity and Development Party (USDP).
The Nobel laureate said in her victory speech that she hoped the vote would mark a “new era” for the nation after decades of repressive junta rule, but appealed for political unity and urged her supporters not to gloat.
The NLD won 37 seats in the 440-seat lower house, along with four in the upper house and two in the regional chambers.
The ASEAN Heads of Government/State and the Secretary-General of ASEAN gathered at the Peace Palace, Phnom Penh, Cambodia, on April 3, 2012, for the 20th ASEAN Summit. Hun Sen, Prime Minister of Cambodia and the Chairman of the 20th ASEAN Summit, presided over the Plenary Session.
The ASEAN leaders discussed the progress of the implementation of the ASEAN Charter and Roadmap for an ASEAN Community, the progress of the implementation of the Master Plan on ASEAN Connectivity (MPAC), the Phnom Penh Agenda on ASEAN Community Building, the Phnom Penh Declaration on “ASEAN: One Community, One Destiny,” the Declaration on Drug-Free ASEAN 2015, the Global Movement of Moderates (GMM), G-20, Exchange of Views on Regional and International Issues, Implementation of the Declaration on the Conduct of Parties in the South China Sea (DOC) and the ASEAN Global Dialogue.
DO YOU KNOW
On April 14, 2012, the wreck of the Atlantic liner Titanic came under UNESCO protection as it has now lain at the bottom of the Atlantic for 100 years. As per the 2009 UN Convention on the Protection of Underwater Cultural Heritage, after a century all wrecks fall under the jurisdiction of UNESCO. On April 14, 1912, the passenger liner Titanic, on its maiden voyage, had hit an iceberg and sank to almost 4,000 meters in waters off Newfoundland, leading to loss of life of 1,514 people on board.
The Pamban Bridge is a cantilever bridge on the Palk Strait and connects Rameswaram on the Pamban Island to mainland India. The bridge spans a 2 km-straight between mainland and island and is the only surface transport link between the two. The Pamban Bridge was India’s first sea bridge and is the second longest in the country after the Bandra-Worli Sea Link at a length of about 2.3 km.
On April 8, 2012, a cruise ship, MS Balmoral, carrying 1,309 passengers, the same number as were on the Titanic, left on a voyage to recreate the exact journey the famous vessel took on its ill-fated maiden voyage 100 years ago. Passengers from 28 countries paid between 2,799 pounds and 5,995 pounds per person for the privilege of retracing the route of the ship involved in probably the world's most famous maritime disaster. The Balmoral left Southampton port, tracing Titanic’s exact route—via Cherbourg in France and Cobh on the south coast of Ireland—and arriving at the spot where liner sank.
Rongali Bihu (spring festival) is celebrated in Assam in April and marks the beginning of the Assamese New Year.
In financial year 2011-12, bank credit grew by 19.3%, surpassing the 16% target set by the Reserve Bank of India (RBI). Outstanding bank loans touched Rs 47.04 lakh crore as on March 31, 2012. The deposits grew by 17.4%.
India’s first 4G service was launched by Bharti Airtel in Kolkata on April 10, 2012. The service offers 40 Mbps speed for download and 20 Mbps for upload. India is one of the first countries in the world to commercially deploy the cutting-edge TD-LTE technology. Bharti Airtel is one of the founding members of the Global TD-LTE Initiative (GTI) which was launched at the Mobile World Congress, 2011.
West Bengal Chief Minister Mamata Banerjee has been named among the 100 most influential persons in the world by the prestigious Time magazine, in its 2012 list that also includes US President Barack Obama, Secretary of State Hillary Clinton and billionaire investor Warren Buffet.
Apart from Banerjee, advocate Anjali Gopalan, who works for the rights of gays and transgendered in India, is the only other Indian in the list. The 2012 list is topped by American basketball sensation Jeremy Lin.
National Dairy Plan, which was launched on April 19, 2012, aims to increase the productivity of milch animals by adopting focused, scientific and systematic processes and help provide rural milk producers with greater access to the organized milk processing sector.
In 2011-12, India’s exports rose 21% from the previous year to $303.7 billion, higher than the government’s target of $300 billion. Imports rose faster at 32.1% to $488.6 billion, mainly due to oil and gold imports, raising the trade deficit to $184.9 billion, from $ 118.6 billion in 2010-11. Pharmaceuticals, petroleum and engineering powered the export growth.
World Health Day is observed on April 7.
National Safe Motherhood Day is observed on April 11.
Earth Day is observed on April 22.
World Book and Copyright Day is observed on April 23.
National Panchayati Raj Day is observed on April 24.
Synriam is India’s first indigenously developed anti-malarial drug. It beats all currently available options on the counts of affordability, compliance and relief. The drug is the result of first successful public-private partnership on pharmaceutical research and development in India. Ranbaxy and the Ministry of Science paid Rs 5 crore each for the development of the drug.
On May 13, 2012 the Indian Parliament completes 60 years of its first sitting
Padder Sapphire mines are located in Doda district of J&K. The Kashmir Sapphire is a characteristic deep blue with a cornflower tinge and resembles the feathers of a peacock. The rare quality gemstone from Padder fetches the highest possible price per carat.
As per the latest data released by the Ministry of Statistics and Programme Implementation, the per capita of India was Rs 60,972 in 2010-11. Goa tops the list with per capita income of Rs 192,652, followed by New Delhi (Rs 175,812) and Chandigarh (Rs 128,634).
HSBC, Europe’s largest bank, has appointed Stuart Milne to head its Indian operations as CEO.
Net investments by Foreign Institutional Investors (FIIs), in the Indian stock market, in 2011-12, was the lowest in the last three years, at Rs 47,935 crore during the fiscal ended March 31, 2012, which was way below the figure of Rs 1.1 lakh crore in 2010-11 and Rs 96,857 crore during 2009-10.
Mitsui Sumitomo Insurance Company (MSICL) of Japan has acquired 26% stake in Max New York Life (MNYL), India’s fourth largest private insurance company. Under the deal, US partner New York Life sold its entire 26% stake in MNYL. MYNL will now be renamed as Max India Insurance Company.
Beleaguered national carrier Air India has received a fresh lease of life in the form of additional infusion of Rs 30,000 crore in tranches till 2020 and induction of 27 Dreamliner aircraft. The government has also decided to hive-off Air India’s MRO (Maintenance, Repair and Overhaul) business and engineering services as two wholly-owned subsidiaries to unburden the cash-strapped carrier of excess staff.
India’s largest car-maker, Maruti Suzuki India, has launched its multicity vehicle Ertiga. The company calls it “Life Utility Vehicle (LUV)”.
Mobile phone group Vodafone has agreed to buy Cable & Wireless Worldwide (CWW) for $1.7 billion, giving it a British fixed-line network to relieve the strain on its wireless operations from data-hungry Smartphone users.
India’s largest IT exporter, Tata Consultancy Services (TCS) has become the first Indian IT company to cross the $10 billion milestone. Its full-year revenue on 2011-12 stood at $10.17 billion (Rs 48,894 crore).
Wipro, India’s number three software services exporter, has signed an agreement to buy Australia’s Promax Applications Group for 35 million Australian dollars.
The Aditya Birla group will buy a majority stake in Kishore Biyani’s fashion apparel business under the Pantaloon brand for Rs 800 crore in an attempt to diversify its fashion retail play. Future Group, which runs Big Bazaar, Home Town and several other retail chains, said that it will spin-off its fashion apparel format from the listed Pantaloon Retail India (PRIL) into a separate company, into which Aditya Birla Nuvo (ABNL) will pump in Rs 800 crore through the issuance of convertible debentures.