Current Affairs India - 9 August 2014

1. The Reserve Bank of India (RBI) issued draft guidelines for implementation of Bharat Bill Payment System (BPPS), an anytime anywhere bill payment system. The proposed guidelines describe the basic requirements of operating the Bharat Bill Payment System (BBPS) which is intended for the implementation of a unified bill payment system across the country.

It would enable the customers to pay the bills with the help of agents and getting instant confirmation of the payment made. School fees, municipal taxes and utility bills payments would become easier now. The centralized bill payments infrastructure will consist of two types of entities, Entity operating the BBPS, which will be the standard setting body and Bharat Bill Payment Operating Units (BBPOUs), which will be the authorized operational units.

2. The Reserve Bank has issued revised guidelines for mortgage guarantee companies today, which said that guarantees provided by MGCs may be treated as contingent liabilities, for which credit conversion factor would be considered as 50% compared to present consideration of 100%.

As per the existing guideline, MGCs have to provide for a lower appropriation to contingency reserves if provisions made towards losses exceeded 35% of the premium or fee earned during a financial year, but it does not specify the exact level of such contingency reserves. As per new regulation, contingency reserves could go to a minimum of 24% of the premium or fee earned, such that the aggregate of provisions made towards losses and contingency reserves is at least 60% of the premium or fee earned during a financial year.

An MGC may now also utilise contingency reserves without prior RBI approval for the purpose of meeting and making good losses suffered by mortgage guarantee holders. However, such a measure can be initiated only after exhausting all other avenues and options to recoup losses. Also the investments made towards government securities, government guaranteed securities and bonds not exceeding the MGC's capital may now be treated as "held to maturity" (HTM), for the purpose of valuation and accounted for accordingly.

3. Capital market regulator SEBI has change the guidelines of Offer-for-sale mechanism to encourage retail participation. As per the new guideline, the number of companies eligible to sell shares using the offer-for-sale (OFS) mechanism through the stock exchanges has been increased from the top 100 to 200 by market capitalization in any of the last four completed quarters.

Now, non-promoter shareholders having at least 10% stake in a company will also be allowed to use OFS to offload their stake. When non-promoters use OFS to sell, promoters/promoter group may participate in the process and add to their shareholding subject to extant norms for public offers and takeover, as per SEBI.

SEBI has also mandated that the lowest price at which the entire offer gets sold (cut-off price) would be determined separately for bids received under retail and non-retail categories. After this, the retail portion would be allocated first with any under-subscription being offered to the non-retail category of investors. The indicative price for retail and non-retail portion has to be displayed separately.

4. Indian capital market regulator, SEBI has imposed a penalty of 13 crore rupees on Reliance Industries 4. Limited for alleged irregularities in issuance of warrants by the company to its promoters. The case related to 2007 earnings and the company's repeatedly failed to disclose the key earnings ratio.

SEBI began adjudication proceedings to probe the violation of relevant clauses under the Listing Agreement and the Securities Contracts (Regulation) Act for not disclosing the Diluted Earnings per Share. As per the terms of the Listing Agreement, the companies have to disclose these earnings in their quarterly statements filed with the stock exchanges.

5. India-s Forex reserves were decreased by USD 573.5 million to 319.990 billion for the week ended 1st August as per the recent weekly data released by RBI. This decrease was mainly due to decrease in the reserve portion in the Foreign Currency Assets. Indian-s forex reserves decreased after four weeks of continuous increase.

The Foreign Currency Assets (FCA) was decreased by USD 1.091 billion to 292.693 billion for the same week. The SDRs (Special Drawing Rights) and Reserve portion with IMF were also decreased by USD 15.5 million and USD 5.9 million respectively for the same week. Gold values were increased by USD 538.9 million to USD 21.173 billion for the same reporting week.

6. Ravi Shankar joined infrastructure finance company IDFC as the head of Bharat Banking with effect from 8th August. IDFC has recently won the commercial banking licence from the RBI recently and plans to start banking operations by end of next year.

Before this, Shankar was head of business and marketing at Fullerton India Credit Co Ltd and Senior Vice-President at TNS India Pvt Ltd.

7. Philips India has roped in Alia Bhatt as its brand ambassador for its beauty business, which includes a range of hair and depilation devices. She will start by endorsing Philips Kerashine range and the company will run a 360 degrees campaign in mid-August.