Banking, Financial and Economic Awareness
1. RBI decides to establish college of supervision
- RBI will establish a college of supervision to improve the skills of its officials and risk assessment in banks, NBFCs.
- College of supervision will also train RBI inspectors in frauds and cyber-security risks in the financial sector.
- RBI will also form an internal research and analysis group under the Department of Supervision and Regulation.
- Earlier, RBI had combined its three separate departments for the supervision of banking, non-banking and co-operative banks into a single Department of Supervision.
- Similarly, RBI also combined its three separate departments for regulation of banking, non-banking and co-operative banks into a single Department of Regulation.
2. SEBI fines ICRA and CARE Ratings
- For continuously giving high ratings (AAA) to Non-Convertible Debentures (NCDs) of IL&FS, SEBI has fined ICRA and CARE Ratings with Rs 25 lakh each.
- SEBI said that despite the stressed balance sheet, asset-liability mismatch and negative debt to equity ratio of IL&FS, ICRA and CARE Ratings continued giving high ratings (AAA) to NCDs of IL&FS.
- Credit rating agencies in India:
- Credit rating agencies in India are registered with SEBI.
- As on Nov 06, 2019, there are seven registered credit rating agencies in India:
- SMERA ratings limited
- Brickwork Ratings India private limited
- CARE ratings limited
- CRISIL Ltd.
- ICRA limited
- India ratings and research Pvt. Ltd. (formerly Fitch Ratings India Pvt. Ltd.)
- Infomerics valuation and rating Pvt. Ltd.
3. SEBI fines Intercon Finance and four other entities
- SEBI has fined Intercon Finance and four other entities for violation of Substantial Acquisition of Shares and Takeovers (SAST) norms.
- The entities failed to publicly announce the acquisition of shares of AksharChem (India) Ltd and violated SAST norms on 5 different occasions.
- As per the SAST norms, entities are required to publicly announce the acquisition of shares of a company if their shareholding in the company goes beyond 15 %.
4. Manappuram Finance to raise Rs 350 crore
- The decision to raise Rs 350 crore was taken by the financial resources and management committee of the board of directors of Manappuram Finance.
- The amount will be raised through the issuance of non-convertible debentures that will be rated, secured and redeemable.
- Non-convertible debentures will have the face value of Rs 10 lakhs each.
- Manappuram Finance:
- It is a non-banking financial company (NBFC).
- Headquarters: Thrissur, Kerala
- MD & CEO: V.P. Nandakumar
- They are medium- to long-term fund instruments. Large companies use them to borrow money.
- Debentures are different from bonds as they are not backed by physical assets or collateral of the issuer.
- They are based on the creditworthiness and reputation of the company. The interest rates of debentures are usually higher than bonds.
- Non-Convertible Debentures (NCDs):
- They are financial instruments that are not convertible into shares or equities.
- They are used for raising long-term funds.
- In comparison to convertible debentures, NCDs provide higher returns.
- In India, NCDs have a minimum maturity period of 90 days.