SEBI gets powers to attach properties, bank accounts

New Delhi, July 22
In a major upgrade of powers given to market regulator SEBI, the government has allowed it to pass orders like search and seizure, attachment of properties, arrest and detention of defaulters and pass disgorgement directions to recover the wrongful gains made in contravention of laws.

At the same time, the government has also allowed SEBI to seek information from other regulators within India and abroad with retrospective effect, paving way for collection of details pertaining to cases pending for over 15 years now.

In another retrospective change, which forms part of the Securities Laws Amendment Ordinance promulgated by the President of India last week, the individuals and companies being probed by SEBI can settle their pending investigations.

Such settlements can be undertaken in cases that are currently pending for more than six years.

To tackle the growing menace of ponzi schemes being floated as Collective Investment Schemes (CIS), the rules have also been amended to classify any money collection of Rs 100 crore or more as CIS operation. SEBI has been given powers to crack down on illegal investment schemes floated by individuals as well, as against companies only as of now.

However, all government-notified schemes would be out of the Collective Investment Scheme framework.

The changes are part of as many as 22 amendments made by the government in three main Acts governing SEBI and its operations - the Securities and Exchange Board of India (SEBI) Act, the Securities Contracts Regulation Act (SCRA) and the Depositories Act - through a 16-page Ordinance.

Among others, SEBI has also been given powers to pass disgorgement orders for amount equivalent to wrongful gains or to losses averted by contravention of regulations.

Besides, the regulator can now enter and search buildings, places, vessels, vehicles and aircraft of defaulters.

Its officers can also also break open the lock of any door, box, locker, safe almirah, etc to get information from suspected entities.

At the same time, the defaulters can seek settlement of pending cases with SEBI with retrospective effect from April 20, 2012.

The Ordinance also allows the government to set up as many special courts, as required, to expedite hearing of cases involving contravention of securities laws.

SEBI has also been given direct powers to attach properties and bank accounts of persons and companies failing to comply with directions, involving payment of penalties, refunds to the investors and other dues. The regulator can also order arrest and detention of defaulters in prison.

The powers to seek information from other domestic and foreign regulators have been made effective retrospectively from March 6, 1998.

For seeking information from outside the country, SEBI can enter into an arrangement, agreement or understanding with relevant foreign authorities with the prior approval of the Central Government.

At the same time, SEBI can now ask for information or records from any person, banks, authorities, boards or corporation, if the regulator is of the opinion that such details could be relevant to any investigation or inquiry being undertaken by it.

With regard to its new search and seizure powers, SEBI can also access the documents maintained in the electronic format. — PTI

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ICRA downgrades GDP forecast for FY 14 to 5.4-5.6%
Tribune News Service

New Delhi, July 22
Rating agency ICRA has revised downwards its GDP forecast for 2013-14 to 5.4-5.6 per cent from 5.8-6 per cent due to weakness in industrial and exports sectors and delayed rate cuts. ICRA said in a statement that while growth-inflation dynamics and concerns regarding the funding of the current account deficit have dominated the setting of monetary policy in the recent quarters, the volatility in the exchange rate of the Indian rupee has now emerged as a key factor influencing the RBI’s actions, because of its attendant implications for macro-economic stability.

“We expect the RBI to keep the repo rate and the cash reserve ratio (CRR) unchanged in the upcoming policy review, to guard against further rupee depreciation”, it said. As a result, interest rates are likely to remain sticky, which would have an impact both on incremental consumer and housing loans as well as investment decisions. Moreover, with business sentiments likely to remain cautious prior to the Parliamentary elections, private sector capital spending is unlikely to revive in 2013-14. Nevertheless, a favourable monsoon is expected to boost consumption demand from the rural sector for various products as well as construction in the second half of the financial year.

Following the weaker-than-expected performance of the Index of Industrial Production (IIP) in April-May 2013 and merchandise exports in the first quarter, as well as the delay in monetary easing and transmission relative to what was anticipated previously, ICRA has revised its GDP forecast for 2013-14 to 5.4-5.6 per cent.

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India’s steel output growth lags world average

New Delhi, July 22
World's average steel production grew by 1.9 per cent, more than double the rate India clocked, raising the possibility of a spurt in imports to keep pace with demand in the country. India produced 6.450 million tonnes (MT) steel in June, a mere 0.9 per cent growth vis-a-vis 6.392 MT a year ago, World Steel Association (WSA) said in its monthly report today.

On the other hand, global production of the metal grew to 132 MT during June compared to 129.229 MT in June last year, led largely by a 4.6 per cent growth in Chinese production.

India's production growth rate in first six months of the year, however, is a little higher when compared to the world's average growth during the period. For India, it was 2.5 per cent at 39.36 MT and two per cent for the world at 789.79 MT.

Meanwhile, China, as usual, produced maximum steel during June at 64.66 MT. Japan produced 9.3 MT and South Korea 5.5 MT, a dip of 5.4 per cent.

Among European Union nations, Germany produced 3.7 MT, Italy produced 2.2 MT and France produced 1.4 MT. Turkey's crude steel production for June 2013 was 3 MT, a slight increase of 0.5 per cent compared to June 2012.

Russia produced 5.7 MT, a dip of 0.8 per cent and Ukraine produced 3.1 MT. The US produced 7.2 MT of steel in June 2013, down by 0.2 per cent in June 2012. Brazil produced 2.8 MT, an increase of 2.7 per cent.

"The crude steel capacity utilisation ratio in June 2013 declined slightly to 79.2 per cent from 79.6 per cent in May 2013," the WSA report added. — PTI

RBI begins scrutiny of nearly 3,000 private finance cos

New Delhi, July 22
The Reserve Bank of India has started scrutiny of nearly 3,000 companies which could be carrying out non-banking finance operations without requisite registration, in the wake of concerns about their actual business activities.

The central bank's move comes against the backdrop of the government efforts to crackdown on entities, that are illegally raising large amounts of money from the public.

Sources said RBI has started scrutiny of about 3,000 companies that are engaged as non-banking financial company (NBFCs) without being registered with it.

The apex bank has sought details from them about their financials, including balance sheets, for the last three years, among others, the sources added.

Information has been sought from companies that are registered with the Registrar of Companies (RoC) in different parts of the country.

As per sources, the Corporate Affairs Ministry had earlier sent a list of thousands of companies that claimed to be engaged in non-banking financial activities.

The list was sent to the central bank after RoCs found many discrepancies in the filings made by these entities, the sources said.

Various ministries, government departments and regulators have been working to crackdown on illegal money pooling schemes in the wake of the fraudulent money-pooling activities perpetrated by many groups.

While the Reserve Bank regulates the NBFCs, collective investment schemes come under the purview of Securities and Exchange Board of India (SEBI) and chit funds are governed by respective state governments. — PTI

LNG from US to cost India $10.5 per mmBtu

New Delhi, July 22
Liquefied natural gas (LNG) from the US will cost around $10.5 per million British thermal unit and will be the cheapest LNG to have been contracted ever by India.

GAIL India Ltd had in December 2011 contracted to buy 3.5 million tonnes a year of super-cooled gas (LNG) from Cheniere Energy Partners LP for 20 years. The LNG price will be linked to a benchmark US price and included a fixed component.

"Based on today's Henry Hub price, the landed cost of this gas will be around $10.5 per mmBtu," a top Oil Ministry official said.

Gas at US Henry, LA is currently traded at around $3.78 per mmBtu. The LNG deliveries are expected to start in late 2016 or mid 2017 from Houston-based Cheniere's Sabine Pass LNG terminal in western Cameron Parish, Louisiana. GAIL's pact has an option to extend the agreement by 10 years.

The price of gas compares to close to $13 per mmBtu that India will pay to RasGas of Qatar for buying 7.5 million tonne per annum of LNG at oil price of $100. LNG on a similar long-term contract with Gorgon project of Australia will cost $16 when at Indian port. — PTI

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RBI tightens gold import rules to tame demand

Mumbai, July 22
The RBI today tightened gold imports again in an attempt to rein-in a record high current account deficit by taming demand for the yellow metal.

The RBI asked all nominated banks and agencies to export at least one-fifth (20%) of every lot of imported gold in all forms, and locally make it available only for jewellers.

The central bank said banks need to retain 20 per cent of the imported gold in customs bonded warehouses, and will only be able to further import gold after exporting at least 75 per cent of the gold from those warehouses.

Last month, the RBI had ruled out any transactions for imports unless they were intended to make jewellery for export, as it looks to rein in a record current account deficit. Current account deficit hit a record high 4.8 per cent of gross domestic product in 2012-13. — Reuters