Monthly Archives: August 2021

8.09 kms

8.09 kms in dry, airless, humid weather in Bombay, India. Have a great Sunday folks.

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5.01 kms virtual race

5K virtual race, second one for the month, in 33.23 mins, improved over the previous one by 41 seconds. Have a great day folks.

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5.28 kms

5.28 kms walk/ run with the kiddo. More of walk than run. Evening run/ walk is very difficult to do, because of the density of traffic.

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imports of GM soya cake

Government of India has relaxed the rules for import of crushed and de-oiled GM soya cake (Non-living organism only). This is going to benefit the farmers, poultry farmers and fishermen in a big way.

Application of provision as in Condition 6(b) of General Notes Regarding Import Policy Schedule — I (Imports) of the ITC (HS) 2017 has now been relaxed to allow imports of 12 Lakh Metric ton of crushed and de-oiled GM soya cake (only Non living organism) under ITC HS codes 23040020 and 23040030 from Nhava Sheva port and LCS Petrapole, till 31st October, 2021 or until further orders, whichever is earlier.

The said relaxation comes after clarification and prior permission from the Ministry of Environment, Forest and Climate Change that “Since soya de-oiled and crushed (DOC) cake does not contain any living modified organism, this Ministry has no concerns and no objection for import of soya cakes from an environmental angle”.

Further, in order to ensure the import quantity of 12 lakh Metric ton is not breached, strict monitoring will be carried out by CBIC through the customs authorities at respective ports.

https://pib.gov.in/PressReleasePage.aspx?PRID=1748658

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penalty on Dhanalakshmi Bank

RBI has levied a penalty of Rs.2.75 million on The Dhanalakshmi Bank Limited for contravention of section 26A(2) of the Banking Regulation Act, 1949 – which mandates banks to transfer to the Depositor Education and Awareness Fund any amount which has not been operated upon for 10 years or more or any deposit which is unclaimed for more than 10 years.

https://www.rbi.org.in/Scripts/BS_PressReleaseDisplay.aspx?prid=52096

The Reserve Bank of India (RBI) has imposed, by an order dated August 23, 2021, a monetary penalty of ₹27.50 lakh (Rupees Twenty Seven Lakh and Fifty Thousand only) on Dhanlaxmi Bank Ltd., Thrissur, Kerala (the bank) for contravention of sub-section (2) of section 26A of the Banking Regulation Act, 1949 (the Act) read with paragraph 3 of The Depositor Education and Awareness Fund Scheme, 2014 (the scheme) enclosed with RBI Circular on ‘The Depositor Education and Awareness Fund Scheme, 2014 – Section 26A of Banking Regulation Act, 1949- Operational Guidelines’ dated May 27, 2014. The penalty has been imposed in exercise of powers vested in RBI under the provisions of section 47 A (1) (c) read with section 46 (4) (i) of the Act.

This action is based on the deficiencies in regulatory compliance and is not intended to pronounce upon the validity of any transaction or agreement entered into by the bank with its customers.

Background

The Statutory Inspection for Supervisory Evaluation (ISE) of the bank was conducted by RBI with reference to its financial position as on March 31, 2020, and the examination of the Risk Assessment Report and Inspection Report pertaining to the same, revealed, inter-alia, contravention of above-mentioned provisions of the Act read with the scheme. In furtherance to the same, a notice was issued to the bank advising it to show cause as to why penalty should not be imposed on it for contravention of the provisions of the Act read with the scheme, as stated therein.

After considering the bank’s reply to the notice and oral submissions made during the personal hearing, RBI came to the conclusion that the charge of contravention of aforesaid provisions of the Act read with the scheme was substantiated and warranted imposition of monetary penalty on the bank.

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CCI penalty on Maruti

The Competition Commission of India (CCI) passed a final order against Maruti Suzuki India Limited (MSIL) for indulging in anti-competitive conduct of Resale Price Maintenance (RPM) in the passenger vehicle segment by way of implementing Discount Control Policy vis-à-vis dealers, and accordingly, imposed a penalty of ₹200 crore (Rupees Two Hundred Crore Only) upon MSIL, besides passing a cease-and-desist order.

CCI found that MSIL had an agreement with its dealers whereby the dealers were restrained from offering discounts to the customers beyond those prescribed by MSIL.

In other words, MSIL had a ‘Discount Control Policy’ in place for its dealers whereby the dealers were discouraged from giving extra discounts, freebies, etc. to the consumers beyond what were permitted by MSIL. If a dealer wanted to offer additional discounts, prior approval of MSIL was mandatory. Any dealer found violating such Discount Control Policy was threatened with imposition of penalty, not only upon the dealership, but also upon its individual persons, including Direct Sales Executive, Regional Manager, Showroom Manager, Team Leader, etc.

To enforce the Discount Control Policy, MSIL appointed Mystery Shopping Agencies (‘MSAs’) who used to pose as customers to MSIL dealerships to find out if any additional discounts were being offered to customers. If found offered, the MSA would report to MSIL management with proof (audio/ video recording) who, in turn, would send an e-mail to the errant dealership with a ‘Mystery Shopping Audit Report’, confronting them with the additional discount offered and asking for clarification. If clarification was not offered by the dealership to the satisfaction of MSIL, penalty would be imposed on the dealership and its employees, accompanied in some cases, by the threat of stopping supplies. MSIL would even dictate to the dealership where the penalty had to be deposited and utilisation of the penalty amount was also done as per the diktats of MSIL.

Thus, CCI found that MSIL not only imposed the Discount Control Policy on its dealers, but also monitored and enforced the same by monitoring dealers through MSAs, imposing penalties on them and threatening strict action like stoppage of supply, collecting and recovering penalty, and utilisation of the same. Hence, such conduct of MSIL which resulted in appreciable adverse effect on competition within India, was found by CCI to be in contravention of the provisions of Section 3(4)(e) read with Section 3(1) of the Competition Act, 2002.

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Vadakkunokkiyantram

Brilliant satirical dark comedy Malayalam movie “Vadakkunokkiyantram” (1989) starring Sreenivasan, Parvathy Jayaraman, Innocent among others.

Its a landmark movie that subtly explores the dark side of a man, who is suffering from severe inferiority complex because of his short height and dark skin. The man (Dineshan) – Sreenivasan in an extraordinarily brilliant role marries the fair looking beautiful Parvathy Jayaram (Shobha) who is a dutifully cast wife in a traditional mould.

Dineshan’s suspicious nature and his lack of confidence plays out in various experiences that slays his mind to no extent. He starts imagining things that are not there and starts facing imaginary enemies and fighting with them. It starts of as a dark comedy but beautifully weaves into a satire on the perplexing nature of Dineshan to a tragedy when he is admitted to a mental hospital for treatment.

The movie won a clutch of awards from the Kerala state government but missed out on a best actor award to Sreenivasan for his exemplary portrayal of a besieged human being. IMDB 7/10

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factoring

IFSCA has issued guidelines on factoring & forfaiting of receivables applicable to all Finance Companies operating in the IFSC and intending to undertake the activity of factoring & forfaiting of receivables. Gist of the guidelines are given below:

  1. Applicability
    3.1 These Guidelines shall be applicable to Finance Companies / Finance Units registered with the Authority under regulation 3 of the Regulations that are intending to undertake the activity of Factoring and Forfaiting of receivables.
    3.2 Part I of these Guidelines shall be applicable to IFSC Banking Units (‘IBUs’) licensed by the Authority under IFSC (Banking) Regulations, 2020, to undertake permissible activities subject to such prudential regulations as may be applicable to them.
    3.3 Part I of these Guidelines shall also be applicable to all participants registered on ‘ITFS Platform’ for undertaking permissible Factoring and Forfaiting transactions under the Framework for setting up of International Trade Financing Services Platform (‘ITFS’) for providing trade finance services at International Financial Services Centres (‘IFSCs’) dated July 9, 2021.
  2. Definitions
    For the purpose of implementation of these Guidelines the following definitions shall
    be referred to:
    (i) “Assignment” means transfer by agreement to a factor of an undivided interest, in whole or in part, in the receivables of an assignor due from a debtor;
    (ii) “Assignee” means a factor in whose favour the receivable is transferred;
    (iii) “Assignor” means any person who is the owner of any receivable;
    (iv) “Debtor” means any person liable to the assignor, whether under a contract or otherwise, to pay any receivable or discharge any obligation in respect of the receivable whether existing, accruing, future, conditional or contingent;
    (v) “Factor” means an entity engaged in the factoring business in the IFSC and includes a Financier under ITFS framework;
    (vi) “Factoring business” means the business of acquisition of receivables of assignor by accepting assignment of such receivables or financing, whether by way of making loans or advances or otherwise against the security interest over any receivables but does not include:
    (a) credit facilities provided by an IBU or a Finance Company/Finance Unit in its ordinary course of business against security of receivables;
    (b) any activity as commission agent or otherwise for sale of agricultural produce or goods of any kind whatsoever or any activity relating to the production, storage, supply, distribution, acquisition or control of such produce or goods or provision of any services.
    (vii) “Financial Contract” means any spot, forward, future, option or swap transaction involving interest rates, commodities, currencies, shares, bonds, debentures or any other financial instrument, any repurchase of securities and lending transaction or any other similar transaction or combination of such transactions entered into in the financial markets;
    (viii) “Forfaiter” means an entity engaged in the forfaiting business in the IFSC and includes Financiers under ITFS framework;
    (ix) “Forfaiting business” means sale and purchase of the receivables on a without recourse basis, as permitted under these Guidelines;
    (x) “netting agreement” means any agreement among the system participants for the purpose of determination by the system provider of the amount of money or securities due or payable or deliverable as a result of setting off or adjusting the payment obligations or delivery obligations among the system participants, including
    the claims and obligations arising out of the termination by the system provider, on the insolvency or dissolution or winding up of any system participant or such circumstances as the system provider, may specify in its rules or regulations or byelaws (by whatever name called), of the transactions admitted for settlement at a future date so that only a net claim be demanded or a net obligation be owned;
    (xi) “Receivables” means the money owed by a debtor and not yet paid to the assignor for goods or services and includes payment of any sum (by whatever name called) required to be paid for the toll or for the use of any infrastructure facility or services.
    All other words and expressions used but not defined in these Guidelines shall have the same meaning respectively assigned to them under IFSC (Banking) Regulations, 2020, ITFS Framework and Finance Company Regulations.
    PART I
    Guidelines on Factoring and Forfaiting transactions
    A. Guidelines on Factoring of Receivables
  3. Assignment of receivables
    5.1 Any assignor may, by an agreement in writing, assign any receivable due and payable to him by any debtor, to any factor, being the assignee, for a consideration as may be agreed between the assignor and the assignee and the assignor shall at the time of such assignment, disclose to the assignee any defences and right of set off
    that may be available to the debtor.
    5.2 On execution of agreement in writing for assignment of receivables, all the rights, remedies and any security interest created over any property exclusively to secure the due payment of receivable shall vest in the assignee and the assignee shall have an absolute right to recover such receivable and exercise all the rights and remedies of the assignor whether by way of damages or otherwise, or whether notice of assignment as provided in clause 6 below is given or not.
    5.3 Where an assignment of receivables constituting security for repayment of any loan advanced by a creditor and where the assignor, with the written consent of such creditor, has given notice of such encumbrance to the assignee, on acceptance of such assignment, the assignee shall pay the consideration for such assignment to the
    creditor.
  4. Notice to debtor and discharge of obligation of such debtor
    An assignee of a receivable shall not be entitled to demand payment of the receivable from the debtor in respect of such receivables unless notice of such assignment is given to the debtor by the assignor or the assignee along with express authority in its favor granted by the assignor.
  5. Discharge of liability of debtor on payment to assignee
    Where a notice of assignment of receivable as stated in clause 6 above is given by the assignor or the assignee, as the case may be, the debtor on receipt of such notice, shall make payment to the assignee and payment made to such assignee in discharge of any obligation in relation to the receivables specified in the notice shall fully discharge the debtor making the payment, from corresponding liability in respect of such payment.
  6. Payment made by debtor to assignor to be held in trust for benefit of assignee in certain cases
    Where no notice of assignment of receivables as stated in clause 6 above is given by the assignor or under his authority by the assignee, any payment made by the debtor in respect of such receivables to the assignor shall be held in trust for the benefit of the assignee which shall be forthwith be paid over to such assignee or its
    agent duly authorized in this behalf.
  7. Assignor prohibition
    The conclusion by an Assignor regarding assignment of receivables with more than one assignee, at a time, in connection to the same invoice, is forbidden, and any such contracts shall be void. Any fraudulent breach of this provision shall be punishable in accordance with the provisions of the applicable law.
  8. Rights and obligations of parties to contract for assignment of receivables
    Without prejudice to the provisions contained in any other law for the time being in force, the debtor shall have the right to notice of assignment as stated in clause 6 above, before any demand is made on it by the assignee and until notice is served on the debtor, the debtor shall be entitled to make payments to the assignor in respect of assigned receivables in accordance with the original contract and such payment shall fully discharge the debtor from corresponding liability under the original contract.
  9. Liability of debtor
    Where a notice of assignment is served as stated in clause 6 above, the debtor shall, (i) intimate the assignee the details of the deposits or advance or payment on account made to the assignor before the receipt of notice of assignment and also provide any other information to the assignee relating to the receivable as and when
    called upon by the assignee to do so;
    (ii) not be entitled to a valid discharge of its liability in respect of assigned receivables, unless it makes the payment due on an assigned receivable to the assignee;
    (iii) in the event of delay in payment by it, pay the receivable along with the interest as per the original contract or as agreed between the parties.
  10. Assignor to be trustee of assignee
    Notwithstanding anything to the contrary contained in any other law for the time being in force, where a debtor makes any payment to an assignor which represents payment due on an assigned receivable, such payment shall be deemed to be for the benefit of the assignee, and the assignor shall be deemed to have received the amount
    of such payment as a trustee of the assignee and the assignor shall make payment of such amount to the assignee.
  11. Principle of debtor protection
    13.1 Unless otherwise specified in these Guidelines, any assignment of the receivable shall not, without the express consent of the debtor in writing, affect the rights and obligations of the debtor (including the terms and conditions of the contract)
    13.2 Consequent upon the assignment of receivables, the payment instruction under the contract entered into between assignor and debtor may modify the name of person, address or account to which the debtor is required to make payment, but such instructions shall not modify:
    (i) The amount of debt specified in the original contract.
    (ii) The date on which payment is to be made or other terms of the original contract relating to payment.
    (iii) The place specified in the original contract at which payment is to be made or in case no such place is mentioned in the contract, the place of payment to a place other than where the debtor is situated.
  12. Defences and right of set off of debtor
    In a claim by the assignee against the debtor for payment of the assigned receivable, the debtor may raise against the assignee:
    (i) all defences and right of set off arising from the original contract, entered into between the assignor and debtor or any other contract that was part of the same transaction, of which the debtor could avail himself as if the assignment had not been made and such claim were made by the assignor instead of assignee.
    Provided that the assignee shall, unless otherwise agreed between the parties, be entitled to recover from the assignor, any loss suffered by it as a result of any such defences and right of set off being exercised by the debtor;
    (ii) any other right of set off, if it was available to the debtor at the time of notice of the assignment, as stated in clause 6 above, was received by the debtor.
  13. Agreement not to raise defences or rights of set-off
    15.1. The debtor may agree with the assignor in writing not to raise against the assignee, the defences and rights of set-off that it could raise pursuant to the above clause. Such an agreement precludes the debtor from raising against the assignee those defences and rights of set-off.
    15.2. The debtor may not waive defences:
    (i) arising from fraudulent acts on the part of the assignee; or
    (ii) based on the debtor’s incapacity.
  14. Modification of original contract
    16.1 Any agreement made before service of notice of the assignment of a receivable, as stated in clause 6 above, between the assignor and the debtor that affects the assignee’s rights in respect of that receivable, shall be effective as against the assignee, and the assignee shall acquire rights in the assigned receivables, as
    modified by such agreement.
    16.2 Any agreement made after notice of the assignment between the assignor and the debtor that affects the assignee’s rights shall be ineffective as against the assignee unless:
    (i) the assignee consents to it or,
    (ii) the receivable is not fully earned by performance and either the modification is provided for in the original contract or, in the context of the original contract, a reasonable assignee would consent to the modification.
    16.3 Nothing contained in sub-clauses (16.1) and (16.2) shall affect any right of the assignor or the assignee arising from breach of an agreement between them.
  15. Breach of Contract
    If the assignor commits any breach of the original contract with the debtor, such breach shall not entitle the debtor to recover from the assignee any sum paid by the debtor to the assignor or the assignee pursuant to the factoring transactions:
    Provided however that nothing contained in this clause shall affect the rights of the debtor to claim from the assignor any loss or damages caused to him by reason of breach of the original contract.
  16. Provisions of these Guidelines not to apply in certain cases
    The provisions of factoring Guidelines shall not apply to any assignment of receivables arising under or from the following transactions, namely:
    (i) any merger, acquisition or amalgamation of business activities or sale or change in the ownership or legal status of business;
    (ii) any assignment of loan receivables by an IBU or Finance company/Finance unit to another IBU or Finance company/Finance unit;
    (iii) securitization transactions (including assignment of receivables to special purpose vehicles or trusts that issue securities against such receivables, bought from a single debtor or single group of debtors);
    (iv) financial contracts governed by netting agreements, except a receivable owed on the termination of all outstanding transactions;
    (v) transactions on a recognised exchange;
    (vi) foreign exchange transactions except receivables;
    (vii)inter-bank payment systems, inter-bank payment agreements or clearance and settlement systems relating to securities or other financial assets or instruments;
    (viii) bank deposits;
    (ix) sale of goods or services for any personal, family or household use;
    (x) letter of credit or independent guarantee;
    (xi) a bilateral contract entered with the supplier the terms of which mandates the contract to be governed by the law of a country other than India; or
    (xii) any other transaction(s) that may be specified by the Authority.
  17. General Guidelines on risk management for undertaking factoring
    transactions
    The assignee undertaking factoring business shall ensure proper and adequate control and reporting mechanisms including but not limited to:
    (i) Assignee shall carry out a thorough credit appraisal of the debtors before entering into any factoring arrangement or prior to establishing lines of credit with the factor.
    (ii) Factoring services shall be extended in respect of receivables which represent genuine trade transactions which are not void in nature and are not pertaining to any trade in dispute.
    (iii) Assignee must be fully aware of the risks involved in factoring transactions such as sovereign risk, country risk, currency risk, transfer risk and documentation risk and credit risk.
    (iv) Every Factor and/or ITFS on behalf of the Factor, as the case may be, shall register the particulars of every transaction of assignment of receivables in its favour with the Central Registry set-up under section 20 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (54 of 2002), within the prescribed timelines from the date of such assignment, wherever applicable.
    (v) Assignee may purchase credit insurance for its exposure from insurers in the IFSC or shall comply with provisions of Sec 2CB of the Insurance Act, 1938 for purchase of such insurance.
    B. Guidelines on Forfaiting of Receivables
  18. The following shall be adhered to while undertaking Forfaiting business by a Forfaiter:
    (i) Receivable shall be a negotiable instrument.
    (ii) Non-recourse to the Seller/Assignor.
    (iii) Notice should be given to debtor whenever there is rediscounting of bill, by Forfaiter.
    (iv) Payment by the importer/debtor must be guaranteed by a third party.
    (v) Adequate safeguards of Information Technology should be placed and Information Technology audit must be done regularly by all the entities as per clause 3 above, undertaking forfaiting activity must ensure that its contractual documents should specify the legal jurisdiction where the case will be resolved in the case of any dispute.
    (vi) All the entities as per clause 3 above, must ascertain the accuracy of information provided by the exporter so as not to prejudice any rights, if there is a breach of warranties.
    (vii) All Entities in IFSC undertaking forfaiting transactions shall adhere to International Chamber of Commerce Uniform Rules for Forfaiting (URF 800)
    (viii) All the entities as per clause 3 above, while undertaking forfaiting transactions shall adopt appropriate risk management policies as indicated in clause 19 above.
  19. Powers of Authority to give directions and to collect information from factor/forfeiter
    21.1 The Authority may, at any time, by general or special order, direct that every factor/forfaiter shall furnish to it, in such form, at such intervals and within such time, such statements, information or particulars relating to factoring/forfaiting business undertaken by them, as may be specified by the Authority from time to time.
    21.2 The Authority may, if it considers necessary in the interest of business enterprises availing factoring/ forfaiting services or in the interest of factor/forfaiter or interest of other stake holders give directions to a factor/forfaiter either generally or in particular or group of factors/forfaiters in respect of any matters relating to or connected with the factoring/forfaiting business undertaken by them.
    21.3 If any factor/forfaiter fails to comply with any direction given by the Authority under sub-clause (21.2), the Authority may prohibit such factor/forfaiter from undertaking the factoring/forfaiting business,
    Provided that before prohibiting any factor/forfaiter from undertaking the factoring/forfaiting business, the factor/forfaiter shall be given a reasonable opportunity to file its written submissions.
  20. All the entities as per clause 3 above, shall ensure compliance with these factoring and forfaiting Guidelines in addition to other applicable laws.

PART II
Prudential Guidelines

  1. In addition to the above Guidelines, the Finance Company /Finance Unit undertaking factoring and/or forfaiting transactions shall adhere to the provisions of IFSCA (Finance Company) Regulations, 2021 and the Guidelines/ Circulars issued thereunder.
  2. Recognition of Non-Performing Assets (NPA)
    24.1 The receivable acquired under factoring which is not paid by the due date, should be treated as NPA irrespective of when the receivable was acquired by the factor or whether the factoring was carried out on “recourse basis” or “non-recourse” basis. The entity on which the exposure was booked should be shown as NPA and provisioning be made accordingly.
    24.2 For the Purpose of asset classification and provisioning, the Circular bearing F.No 172/ IFSCA/Finance Company/Unit Regulations/2021-22/3’ dated May 03, 2021, on ‘Prudential Regulations and activity specific Guidelines’ issued by IFSCA, shall be adhered to.
  3. Since under “without recourse” factoring transactions, the Finance Company/ Finance Unit is underwriting the credit risk on the debtor, there should be a clearly laid down Board-approved limit for all such underwriting commitments.
  4. The Finance Company/ Finance Unit shall have a Board approved risk mitigation strategy or policy for identified risks while undertaking factoring and forfaiting business.
  5. The factoring and forfaiting transactions shall be covered with the overall exposure ceiling as per the Authority’s circular bearing ‘F. No 172/ IFSCA/Finance Company/Unit Regulations/2021-22/6’ dated, May 25, 2021 on ‘Framework on Computation of Exposure Ceiling for Finance Companies/Finance Units’, as applicable. The exposure shall be reckoned as under:
    (i) In case of factoring on “with-recourse” basis, the exposure would be reckoned on the assignor.
    (ii) In case of factoring on “without-recourse” basis, the exposure would be reckoned on the debtor, irrespective of the credit risk cover/ protection provided, except in cases of international factoring where the entire credit risk is assumed by import factor.

IFSCA regulations are important from a professional point of view. Every day we see some new circulars and guidelines being released. Its high time that ICSI should do a training program or a crash course in IFSCA laws, statues, guidelines, circulars and regulations.

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corporate governance

IFSCA has laid down guidelines on corporate government which needs to be followed by every Finance Company set up in the IFSC GIFT CITY, Ahmedabad. The gist of the guidelines are given below:

Part I
Generic Guidelines

  1. Corporate governance framework and disclosure
    4.1 Every Finance Company registered with the Authority shall develop and implement a Board approved framework on Corporate Governance and Disclosure Requirements as relevant to its business operations which may be guided by the Guidelines specified in Part II of this Circular.
    4.2 Every Finance Company shall publish the framework on Corporate Governance and Disclosure Requirements as per the disclosures mandated under the Companies Act, 2013, on its website, wherever available and/or in their Annual Report.
  2. Fit and Proper Criteria
    5.1 The Finance Company shall establish effective systems and controls to ensure that all the members of its Board meet the ‘fit and proper’ criteria and are eligible to be a member of its Board. A Finance Company must carry out due diligence of its Board members, both at the time of their appointment and at reasonably regular frequency during their term on the Board. The Finance Company shall, inter-alia, ensure:
    (i) To undertake a process of due diligence to determine the suitability of the person for appointment / continuing to hold appointment as a director on the Board, based upon qualification, expertise, track record, integrity and other ‘fit and proper’ criteria as specified by the Authority from time to time. It shall obtain necessary information and declaration from the proposed / existing director (s) for this purpose as per the format given in the Information on Management , on an annual basis.
    (ii) To have a Board approved mechanism to scrutinize the results of the due diligence process, information and declarations given by the proposed/existing director (s) and accordingly decide on their on-boarding.
    (iii) To obtain a declaration on an annual basis, from each and every member of its Board giving details of the material changes, if any, in the information provided earlier. Declaration shall also be required in case there is no material change in the information provided earlier. The declaration as obtained by the Finance Company, shall be certified by the auditor of the Finance Company for onward submission to the Authority not later than 30 days from the end of the financial year.

Part II
Detailed Guidelines

  1. Board of Directors
    (i) The Board of Directors of a Finance Company shall be of an appropriate size based on the scope and nature of operations of its business.
    (ii) The Board of Directors shall possess core competencies such as accounting, finance, law, business or management experience, industry knowledge, strategic planning experience and customer based experience or knowledge.
    (iii) There shall be director’s training on a regular basis to ensure that the members of the Board are kept up to date on the relevant field.
    (iv) The Finance Company shall obtain a duly signed deed of covenants (which shall deal with, but not be limited to the points mentioned below) whereby:
    (a) Every director shall:
     acknowledge that his/her appointment as the director on the Board is subject to the applicable laws, rules, regulations and Articles of Association and that he/she shall act only within the powers as laid down by the same.
     undertake to exercise the powers vested in him/her in good faith and in the interest of the Finance Company.
     disclose by general notice to the Board, his/her directorships, memberships or any interest in any form, in other corporate bodies.
     acquire proper understanding of the business of the Finance Company and perform his/her duties with proper care, diligence and skills, based on his/her knowledge and experience.
     exercise independent judgement in discharging his/ her duties and not seek to influence any decision of the Board for any consideration other than the interest of the Finance Company, shall express his/her views and opinions at the Board meetings without any fear or favor, shall not evade responsibility in any form and shall not make improper use of information disclosed to him/her.
     assist the Board in exercising adequate oversight on the business and operations of the Finance Company, particularly for ensuring compliance with all applicable laws, rules and regulations.


 shall also commit to inform the Authority, on becoming aware of a real or potential breach of any applicable laws, rules or regulations by the Finance Company.
(b) The deed of covenant shall include that the Finance Company has apprised the directors about the relevant control systems and procedures, voting rights at Board meetings, remuneration policy, insider dealing restrictions, appointment of senior executives and their authority, deliberations of the Committees of the Board and all other
information which is reasonably required for them to carry out their functions and duties, effectively.

  1. Compliance Officer
    The Finance Company shall appoint a Compliance Officer who shall be a member of the senior management with direct reporting to the Board. The Compliance Officer shall be responsible for implementing/operationalizing the policies and procedures approved by the Board and shall monitor adherence to all applicable laws, rules and
    regulations including these Guidelines as well as all internal policies and procedures.
  2. Committees of the Board
    Depending on the nature, scale and complexity of its business operations, the Board may constitute committees which may include audit committee, nomination and remuneration committee, risk management committee, stakeholder relationship committee or any other committee as may be mandated under the Companies Act, 2013, and by the Authority from time to time.
  3. Related Party Transactions
    The Finance Company shall formulate a Board approved policy which addresses all aspects of related party transactions. The same shall be reviewed by the Board of the Finance Company from time to time.
  4. Disclosure and Transparency
    Besides ensuring disclosures under the Companies Act, 2013 and these Guidelines, the Finance Company shall ensure that the information provided to stakeholders, as the case may be, is timely, accurate, relevant and is not
    misleading.
    10.1 Information to be placed before Board of Directors
    The Finance Company shall ensure to place before the Board at least the following information:
    (i) Annual operating plans and budgets, capital budgets and related updates.
    (ii) Quarterly results of the Finance Company.

(iii) Minutes of meetings of the Board constituted Committees.
(iv) A statement on the change of directors, if any, and a declaration confirming the compliance with the ‘fit and proper’ criteria about them.
(v) Any materially adverse event which could affect the Finance Company, its property or operations.
(vi) Transactions that involve substantial payment towards goodwill, brand equity, or intellectual property and about any other transaction which is carried out beyond the normal course of business of the Finance Company.
(vii) Conformity with Corporate Governance and Disclosure Requirements framework.
(viii) All material breaches of internal policies, norms, risk limits and any other important information of the like nature.
10.2 Disclosures to be made on the website of the Finance Company
The Finance Company shall disseminate the requisite information on its website, wherever available and/or in their Annual Report, which shall include the following:
(i) Basic information about the Finance Company and about its group;
(ii) The Annual Report of the Finance Company;
(iii) Corporate Governance report in conformity with the provisions of the Companies Act, 2013 and these Guidelines; and
(iv) Other significant information, if any;
10.3 Disclosures to be made in the Annual Financial Statements (AFS)
In addition to the disclosure required under the Companies Act, 2013, a Finance Company shall also include the following in its Annual Financial Statement:
(i) Components of owned funds and other related information;
(ii) Details on the off-balance sheet exposures, if any;
(iii) Its Asset Liability profile;
(iv) Extent of financing by parent company;
(v) Business ratios including Return on Equity (RoE) and Return on Assets (RoA);
(vi) Concentration of Non-Performing Assets (NPAs) including total exposure to top five NPAs;
(vii) Disclosures on provisioning in the Balance Sheet;
(viii) Details on the registration/license/ authorization, by whatever name called, obtained from any financial sector regulators;

(ix) Penalties or fine imposed by any statutory authority/ financial sector regulators including strictures or directions on the basis of inspection reports or other adverse findings against it.

NOTE: I am surprised to find no role for company secretaries in this corporate governance guidelines to the Finance Company situated in IFSC. The Compliance officer should have been a Company Secretary and the certificate of auditor in respect of the Fit and Proper Criteria of the Board of Directors should ideally have been by a Practicing Company Secretary.

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7.95 kms

7.95 kms in pleasant weather. Have a great day folks.

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national mission on edible oils

https://pib.gov.in/PressReleasePage.aspx?PRID=1746943

The Union Cabinet, chaired by the Prime Minister Shri Narendra Modi has given its approval to launch a new Mission on Oil palm to be known as the National Mission on Edible Oils – Oil Palm (NMEO-OP) as a new Centrally Sponsored Scheme with a special focus on the North east region and the Andaman and Nicobar Islands.  Due to the heavy dependence on imports for edible oils, it is important to make efforts for increasing the domestic production of edible oils in which increasing area and productivity of oil palm plays an important part.

A financial outlay of Rs.11,040 crore has been made for the scheme, out of which Rs.8,844 crore is the Government of India share and Rs.2,196 crore is State share and this includes the viability gap funding also.

  Under this scheme, it is proposed to cover an additional area  of 6.5 lakh hectare (ha.) for oil palm till the year 2025-26 and thereby reaching the target of 10 lakh hectares ultimately.  The production of Crude Palm Oil (CPO) is expected to go upto 11.20 lakh tonnes by 2025-26 and upto 28 lakh tonnes by 2029-30.

The scheme will immensely benefit the oil palm farmers, increase capital investment, create employment generation, shall reduce the import dependence and also increase the income of the farmers.

Since 1991-92, many efforts have been made by the Government of India  to increase the production of oilseeds and oil palm. The oilseeds production has increased from 275 lakh tons in 2014-15 to 365.65 lakh tons in 2020-21.  For harnessing the potential of palm oil production, in the year 2020, an assessment has been made by the Indian institute of Oil Palm Research (IIOPR) for cultivation of oil palm which has given an assessment of around 28 lakh ha.  Thus, there is huge potential in oil palm plantation and subsequently production of Crude Palm Oil (CPO). At present only 3.70 lakh hectares is under Oil Palm cultivation. Oil palm produces 10 to 46 times more oil per hectare compared to other oilseed crops and has yield of around 4 tons oil per ha. Thus, it has enormous potential for cultivation.

Keeping the above in view, and also the fact that even today around 98% of CPO is being imported, it is proposed to launch the Scheme to further increase the area and  production of CPO in the country.  The proposed scheme will subsume the current National Food Security Mission-Oil Palm programme.

 There are two major focus areas of the Scheme. The oil palm farmers produce Fresh Fruit Bunches (FFBs) from which oil is extracted by the industry. Presently the prices of these FFBs are linked to the international CPO prices fluctuations.  For the first time, the Government of India will give a price assurance to the oil palm farmers for the FFBs. This will be known as the Viability Price (VP).   This will protect the farmers from the fluctuations of the international CPO  prices and protect him from the volatility.   This VP shall be the annual average CPO price of the last 5 years adjusted with the wholesale price index to be multiplied by 14.3 %.  This will be fixed yearly for the oil palm year from 1st November to 31st October. This assurance will inculcate confidence in the Indian oil palm farmers to go for increased area and thereby more production of palm oil.  A Formula price (FP)  will also be fixed which will be 14.3% of CPO and will be fixed on a monthly basis. The viability gap funding will be the VP-FP and if the need arises, it would be paid directly to the farmers accounts in the form of DBT.

The assurance to the farmers will be in the form of the viability gap funding and the industry will be mandated to pay 14.3% of the CPO price which will eventually go up to 15.3%.  There is a sunset clause for the scheme which is 1st November 2037.  To give impetus to the North-East and Andaman, the Government will additional bear a cost of 2% of the CPO price to ensure that the farmers are paid at par with the rest of India.  The states who adopt the mechanism proposed by the Government of India would benefit from the viability gap payment proposed in the scheme and for this they will enter into MoUs with the Central Government.

The second major focus of the scheme is to  substantially increase the assistance of inputs/interventions.  A substantial increase has been made for planting material for oil palm and this has increased from Rs 12,000 per ha to  Rs.29000 per ha. Further substantial increase has been made for  maintenance and inter-cropping interventions. A special assistance @ Rs 250 per plant is being given to replant old gardens for rejuvenation of old gardens.

To address the issue of shortage of planting material in the country, seed gardens will be provided assistance up to Rs.80 lakhs for 15 ha. in Rest of India and Rs.100 lakhs  for 15 ha in North-East and Andaman regions.  Further, assistance for seed gardens @ Rs.40 lakhs and Rs.50 lakhs for Rest of India and North-East & Andaman regions respectively. Further Special assistance will be provided for the North-East and the Andaman regions in which special provisions is being made for half moon terrace cultivation, bio fencing and land clearance along with integrated farming.   For capital assistance to the industry, for the North East states and Andamans, a provision of Rs 5 core of 5 mt/hr unit with pro rata increase for higher capacity. This will attract the industry to these regions.

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Sports & Business

SPORTS AND BUSINESS

INTRODUCTION

I will write about my own experience of organizing and running a sports company (albeit a non profit one) since the last more than 10 years. The sport is marathon running and I have been a marathon runner since 2005, the second year of the then SCMM Mumbai Marathon.

I have been a founder member of Mumbai Road Runners (MRR) a popular FB group and subsequently from 2016 onwards a Director of Mumbai Road Runners Foundation (a section 8 no profit company).

HISTORY

Marathon as a sport originated when Pheidippides ran the distance of approximately 40 kms from Marathon to Athens to declare news of the victory in the battle of Marathon. The first ever Indian to have participated in an Olympic marathon was Phadeppa Chaugule who ran the 1920 Amsterdam marathon (source Wikipedia)

FEDERATION

Marathon of course does not have any separate federation of its own, but is governed by the Athletics body viz. Athletics Federation of India (AFI). Adille Sumariwala is the present President of AFI. It has a website at https://indianathletics.in/

ORIGINS OF MARATHON IN INDIA

Marathon events were organized in India by the national body for their selection to the various international events like Asian Games, Commonwealth Games and Olympics. Pune International Marathon is the oldest marathon event in India, but it is badly organized. But the real impetus to the spurt in popularity in marathon running came with the advent of the Mumbai Marathon organized by Procam International from 2004 onwards.

It took only a few years for the popularity to surge tremendously with plethora of sports products like running shoes, socks, compression socks, energy drinks, GPS watches, coaches et al.

BUSINESS OF SPORTS

The business side of marathon running picked up in earnest few years down the line after the Mumbai Marathon was inaugurated with sports companies like Puma, Reebok, Adidas, Nike, and later on Skechers, Asics and now Saucony and Brooks coming in large numbers.

In energy drinks market, Gatorade was there when I first started running, but later on Enerzal came and Fast&Up and recently Oziva energy drinks. FUP has expanded itself aggressively supplying to almost all the IPL and ISL teams and also the recent Olympic trials held at Patiala.

In the GPS watches or wearable technology section we have Garmin which is the largest supplier in India. TomTom was there briefly but their business plans changed and they exited the market. Xiaomi watch i.e. Amazfit Bip Pro is attracting lots of interest because of its price point which is very low and it gives tremendous value for money.

Then there are other products like tee shirts, shorts, socks, wrist band, bottles, all of which put together is worth billions of dollars in the Indian market. The number of events has grown up from 1 in 2004 to more than 1700 in 2019 before the Covid pandemic broke out.

BUSINESS OF ORGANISATION

Organisation of a marathon is a thankless job as I have done it about half a dozen times. There is the whole issue of permission from the BMC, police etc. which is hard to get. Plus there are other varied costs like providing water and energy drinks to the runners enroute, bananas, making arrangement for stage, inviting celebrities, tee shirt, logistics, transport etc. which strains the resources of any marathon organizer. That is why big ticket marathon events worldwide like Boston, New York, London, Chicago have title sponsors to take care of the cost. Mumbai Marathon had Standard Chartered Bank for a long time and from the last 3 years, the Tatas have picked up the bill.

AFI

The AFI has no say in any private marathon events in the country except the marquee ones like Mumbai Marathon which they ask their athletes to run in order to qualify for international events like the Olympics etc. But AFI is the regulatory body for track and field athletics, marathon running and race walking in the country.

AFI is a staggering organization with its state units and district units. There are coaching exams for its runners at two levels viz. Pre Level 1 coaches and Level 1 coaches. But the athletes can also do coaching program from SAI which is more extensive. The AFI constitution details can be found here i.e. https://indianathletics.in/wp-content/uploads/2020/09/AFI-CONSTITUTION-SEP-2020.pdf

They do have an Arbitration Commission in their organization which has detailed rules and procedures. Then they also have a Complaint Redressal Committee, Committee against Sexual harassment etc. They also have a Disciplinary Committee, Women Committee, and Ethics Commission among others.

CHEATING  

During all these years, I have seen cheating happening in a myriad of ways. In early days, when the chip system was there, some runners ask their good runner friends to run a part of the race and hand the chip over near the finish line. Sometimes runners take a small car ride of about 3 to 4 kms and then restart the race. In one case recently, the coach carried multiple bibs in his pocket in order for his wards to qualify for big international events like Comrades. I have never come across doping among elite runners so far.

NEED AND ROLE OF AFI

AFI acts as a go between the national sports body and national level athletes and the international body i.e. IAAF and the Olympics bodies and those of Asian Games and Commonwealth Games. AFI selects the Indian team for these events and is responsible for their travel & stay arrangements, coaches, etc. In absence of a strong AFI the athletes do tend to suffer as rival bodies emerge like it has happened in some sports and in certain other sports, the election process is not carried out duly as per the recommendations of the Ministry of Sports.

CONCLUSION

So I can say from my vantage point that sports is a multi million rupees business in Indis what with the proliferation of so many leagues in various sports.

References: Wikipedia, AFI website

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Bharatham

Brilliant award winning Malayalam movie “Bharatham” (1991) starring Mohanlal, Nedumadi Venu, Urvashi among others. Directed by Sibi Malayil its a major tour de force in Malayalam cinema. Its a musical drama film with lot of pathos infused into the story.

Gopi (Mohanlal) is a carnatic musician taken tutelage from his elder brother Raman (Nedumadi Venu). Elder brother gets involved into drinks and spoils a few performances where his younger brother shines. Younger brother takes over the musical lineage resulting in jealousy and family recriminations.

The script by Lohithdas is quite strong. Elder brother does not get invited to the famous Coimbatore music festival where Mohanlal shines again and elder bro comes on stage and hands over the family heirloom to him and disappears.

Meanwhile they have a speech impaired sister whose marriage is fixed and that needs to take place vis a vis the tragedy with the elder brother to be discovered. Mohanlal has given a magnificent performance befitting the national award for best actor bestowed on him. He is mesmerizingly brilliant, a kind of understated elegance in his acting. I think he is probably the most all around actor in Indian cinema today, having played so many kind of roles with élan and class.

Lakshmi as the wife of the elder brother has also essayed a brilliant role, Nice to see her in action after her brief stint in Hindi cinema. Other actors are all okay to good. Beauty of the movie is the music by Raveendran and Johnson and the singing by KJ Yesudas. It is quite simply breathtaking to say the least. He has shattered the roof and more with his rendition of classical music. Quite simply brilliant. IMDB 9/10

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Kireedam

Award winning Malayalam movie “Kireedam” (1989) starring Mohanlal, Thilakan, Sankarady among others.

Sethu (Mohanlal) is an unemployed son of his father (Thilakan) who is a police constable an upright one for that matter. Father catches a no gooder son of a MLA who has parked in the wrong lane and has to pay the price for honesty by being transferred to a notorious criminal district.

Son writes the police exam and passes all levels with flying colours. There in the new district, Father catches a notorious criminal out to harass common people and trashes him in full public view. Upon seeing this, the criminal’s friend joins in action and starts beating the father. This Mohanlal could not bear to see and he in turn trashes both the criminals black and blue.

And that starts a chain of events which takes us to the rest of the movie. Plenty of drama and action in the movie. Thankfully, the Director has kept the script tight.

Mohanlal has acted quite brilliantly in an under stated elegant sort of way without any histrionics. But the real star of the movie is Thilakan, the father who is absolutely magnificent with all his emotions as a father and as an inspector beautifully displayed. IMDB 8/10

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7.64 kms

7.64 kms in a humid morning in Bombay. Easy pace running today after Sunday’s race pace. Have a great day folks.

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