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![reasons why ADRs terminate, but in most cases the foreign issuer is undergoing some type
of reorganization or merger.
Owners of ADRs are typically notified in writing at least thirty days prior to a termination. Once
notified, an owner can surrender their ADRs and take delivery of the foreign securities
represented by the Receipt, or do nothing. If an ADR holder elects to take possession of the
underlying foreign shares, there is no guarantee the shares will trade on any US exchange. The
holder of the foreign shares would have to find a broker who has trading authority in the
foreign market where those shares trade. If the owner continues to hold the ADR past the
effective date of termination, the depositary bank will continue to hold the foreign deposited
securities and collect dividends, but will cease distributions to ADR owners.
Usually up to one year after the effective date of the termination, the depositary bank will
liquidate and allocate the proceeds to those respective clients. Many US brokerages can
continue to hold foreign stock, but may lack the ability to trade it overseas.
(GDRs) Global Depositary Receipts:-
A Global depository receipt (GDR) also known as International depository receipt (IDR), is a
certificate issued by a depository bank, which purchases shares of foreign companies and
deposits it on the account. They are the global equivalent of the original American Depository
Receipts (ADR) on which they are based. GDRs represent ownership of an underlying number
of shares of a foreign company and are commonly used to invest in companies from developing
or emerging markets by investors in developed markets.
Prices of global depositary receipt are based on the values of related shares, but they are
traded and settled independently of the underlying share. Typically 1 GDR is equal to 10
underlying shares, but any ratio can be used. It is a negotiable instrument which is
denominated in some freely convertible currency.[1] GDRs enables a company (issuer) to access
investors in capital markets outside of its home country.](https://image.slidesharecdn.com/regulatorsinindia-150109040916-conversion-gate01/85/Regulators-in-india-21-320.jpg)
![greenfield projects, funding up to 50% (through ECB) is allowed. In telecom sector too, up to
50% funding through ECBs is allowed. Recently Government of India has increased limits on RBI
to up to $40[1] billions and allowed borrowings in Chinese currency yuan.
Borrowers can use 25 per cent of the ECB to repay rupee debt and the remaining 75 per cent
should be used for new projects. A borrower can not refinance its existing rupee loan through
ECB. The money raised through ECB is cheaper given near-zero interest rates in the US and
Europe, Indian companies can repay their existing expensive loans from that.
(FEMA)Foreign Exchange Management Act,1999:-
The Foreign Exchange Management Act, 1999 (FEMA) is an Act of the Parliament of India "to
consolidate and amend the law relating to foreign exchange with the objective of facilitating
external trade and payments and for promoting the orderly development and maintenance of
foreign exchange market in India". It was passed in the winter session of Parliament in 1999,
replacing the Foreign Exchange Regulation Act (FERA). This act seeks to make offenses related
to foreign exchange civil offenses. It extends to the whole of India.,[1] replacing FERA, which had
become incompatible with the pro-liberalization policies of the Government of India. It enabled
a new foreign exchange management regime consistent with the emerging framework of
the World Trade Organization (WTO). It also paved way to Prevention of Money Laundering
Act 2002, which was effected from 1 July 2005.
Unlike other laws where everything is permitted unless specifically prohibited, under this
act everything was prohibited unless specifically permitted. Hence the tenor and tone of the Act
was very drastic. It required imprisonment even for minor offences. Under FERA a person was
presumed guilty unless he proved himself innocent, whereas under other laws a person is
presumed innocent unless he is proven guilty.
Switch for FERA:-](https://image.slidesharecdn.com/regulatorsinindia-150109040916-conversion-gate01/85/Regulators-in-india-23-320.jpg)
![FERA, in place since 1975, did not succeed in restricting activities such as the expansion
of transnational corporations (TNCs). The concessions made to FERA in 1991-1993 showed that
FERA was on the verge of becoming redundant.[3] After the amendment of FERA in 1993, it was
decided that the act would become the FEMA. This was done in order to relax the controls on
foreign exchange in India, as a result of economic liberalization. FEMA served to make
transactions for external trade (exports and imports) easier – transactions involving current
account for external trade no longer required RBI’s permission. The deals in Foreign Exchange
were to be ‘managed’ instead of ‘regulated’. The switch to FEMA shows the change on the part
of the government in terms of foreign capital.[4]
Need for management:-
The buying and selling of foreign currency and other debt instruments by businesses,
individuals and governments happens in the foreign exchange market. Apart from being very
competitive, this market is also the largest and most liquid market in the world as well as
in India.[5] It constantly undergoes changes and innovations, which can either be beneficial to a
country or expose them to greater risks. The management of foreign exchange market becomes
necessary in order to mitigate and avoid the risks. Central banks would work towards an orderly
functioning of the transactions which can also develop their foreign exchange market.[6]
Whether under FERA or FEMA’s control, the need for the management of foreign exchange is
important. It is necessary to keep adequate amount of foreign exc from Import Substitution to
Export Promotion.
Main feature:-
Activities such as payments made to any person outside India or receipts from them, along
with the deals in foreign exchange and foreign security is restricted. It is FEMA that gives
the central government the power to impose the restrictions.
Restrictions are imposed on residents of India who carry out transactions in foreign
exchange, foreign security or who own or hold immovable property abroad.](https://image.slidesharecdn.com/regulatorsinindia-150109040916-conversion-gate01/85/Regulators-in-india-24-320.jpg)
![2. Year of establishment:- 1953
3. Website:- www.fmc.gov.in
4. All about FMC in brief:
The Forward Markets Commission (FMC) is the chief regulator of commodity futures
markets in India. As of July 2014 for the year 2014-15, it regulated Rs 17 trillion[1] worth
of commodity trades in India. It is headquartered in Mumbai and this financial
regulatoryagency is overseen by the Ministry of Finance.
Commission:-
Established in 1953 under the provisions of the Forward Contracts (Regulation) Act, 1952, it
consists of not less than two but not exceeding four members appointed by the Central
Government, out of them one being nominated by the Central Government to be the Chairman
of the Commission. Currently Commission comprises three members among whom Shri Ramesh
Abhishek, IAS is the Chairman, Dr. M. Mathisekaran, IES and Shri Nagendraa Parakh are the
Members of the Commission. Currently, the Commission allowscommodity trading in 22
exchanges in India, of which 6 are national.
Chairman of FMC
Mr. Ramesh Abhishek is the Chairman of commodities regulator FMC. He is an IAS Officer of
1982 Batch (Bihar Cadre) and was appointed on 24 September 2012 as the Chairman of](https://image.slidesharecdn.com/regulatorsinindia-150109040916-conversion-gate01/85/Regulators-in-india-26-320.jpg)
![committees set up by Reserve bank of India, Ministry of Finance and Govt. of India. He was also
a member representing India on the Standing committee II of the IOSCO.
Nagendra Parakh carries with him varied regulatory experiences of Indian and global Securities
market.
History:-
From 2013 september 09, the commission is overseen by the Department of Economic
Affairs, Ministry of Finance. Since futures traded in India are traditionally on food commodities,
earlier it was overseen by Ministry of Consumer Affairs, Food and Public Distribution (India).[2]
Development of the Industry:-
India has a long history of trading commodities and considered the pioneer in some forms of
derivatives trading. The first derivative market was set up in 1875 in Mumbai, where cotton
futures was traded. This was followed by establishment of futures markets in edible oilseeds
complex, raw jute and jute goods and bullion. This became an active industry with volumes
reported to be large.
However, in 1935 a law was passed allowing the government to in part restrict and directly
control food production (Defence of India Act, 1935). This included the ability to restrict or ban
the trading in derivatives on those food commodities. Post independence, in the 1950s, India
continued to struggle with feeding its population and the government increasingly restricting
trading in food commodities. Just at the time the FMC was established, the government felt
that derivative markets increased speculation which led to increased costs and price
instabilities. And in 1953 finally prohibited options and futures trading altogether.[3]
The industry was pushed underground and the prohibition meant that development and
expansion came to a halt. In the 1970 as futures and options markets began to develop in the
rest of the world, Indian derivatives markets were left behind. The apprehensions about the
role of speculation, particularly in the conditions of scarcity, prompted the Government to
continue the prohibition well into the 1980s.](https://image.slidesharecdn.com/regulatorsinindia-150109040916-conversion-gate01/85/Regulators-in-india-28-320.jpg)
![brands worldwide. In 2013, TCS is ranked 40th overall in the Forbes World's Most Innovative
Companies ranking, making it both the highest-ranked IT services company and the top Indian
company. It is the world's 10th largest IT services provider, measured by revenues
3. Bharti Airtel:-
Bharti Airtel Limited, commonly known as Airtel, is an Indian
multinational telecommunications services company headquartered inNew Delhi, India.
It operates in 20 countries across South Asia, Africa, and the Channel Islands. Airtel has
a GSM network in all countries in which it operates, providing 2G, 3G and 4G services
depending upon the country of operation. Airtel is the world's third largest mobile
telecommunications company by subscribers, with over 275 million subscribers across
20 countries as of July 2013.[6] It is the largest cellular service provider in India, with
192.22 million subscribers as of August 2013.[7] Airtel is the Second largest Asia-Pacific
mobile operator by subscriber base, behind China Mobile.
Airtel is the largest provider of mobile telephony and second largest provider of fixed
telephony in India, and is also a provider ofbroadband and subscription
television services. It offers its telecom services under the "airtel" brand, and is headed
by Sunil Bharti Mittal. Bharti Airtel is the first Indian telecom service provider to
achieve Cisco Gold Certification.[8] It also acts as a carrier for national and international
long distance communication services. The company has a submarine cable landing
station at Chennai, which connects the submarine cable connecting Chennai and
Singapore.
Bharti Airtel added 5.10 lakh subscribers to take its base to 20.97 crore at the end of
July,2014. Its market share in India is highest with a value of 28.41%.
Airtel is credited with pioneering the business strategy of outsourcing all of its business
operations except marketing, sales and finance and building the 'minutes factory' model
of low cost and high volumes. The strategy has since been copied by several
operators.[9] Its network—base stations, microwave links, etc.—is maintained
by Ericsson and Nokia Siemens Network[10] whereas IT support is provided](https://image.slidesharecdn.com/regulatorsinindia-150109040916-conversion-gate01/85/Regulators-in-india-44-320.jpg)
![by IBM,[11] and transmission towers are maintained by another company (Bharti Infratel
Ltd. in India).[12] Ericsson agreed for the first time to be paid by the minute for
installation and maintenance of their equipment rather than being paid up front, which
allowed Airtel to provide low call rates of 1/minute (US$0.02/minute).
4.Wipro:-
Wipro Limited (Western India Products Limited[1]) is an Indian multinational IT
Consulting and System Integrationservices company headquartered in Bangalore,
Karnataka.[4][5] As of March 2014, the company has 146,000 employees servicing over 900 large
enterprise & Fortune 1000 corporations with a presence in 61 countries. On 31 March 2014,
its market capitalisation was approximately 1.27 trillion ($20.8 billion), making it one of India's
largest publicly traded company and seventh largest IT services firm globally.
To focus on core IT Business, it demerged its non-IT businesses into a separate company named
Wipro Enterprises Limited with effect from 31 March 2013 The demerged company offers
consumer care, lighting, healthcare and infrastructure engineering and contributed to approx.
10% of the revenues of Wipro Limited in previous financial yearRecently Wipro has also
identified Brazil, Canada & Australia as rapidly growing markets globally and has committed to
strengthen the presence in the respective countries over the next 3 years.
5.Infosys:-
Infosys Ltd (formerly Infosys Technologies) is an Indian multinational corporation that
provides business consulting, information technology, software
engineering and outsourcing services. It is headquartered in Bangalore, Karnataka. Infosys is
the third-largest India-based IT services company by 2014 revenues,[4] and the fifth largest
employer of H-1B visa professionals in the United States in FY 2013.[5] On 31 March 2014,
its market capitalisation was 188,510 crores ($31.11 billion), making it India's fifth largest
publicly traded company. Its Q2 profit for FY14/15 rose to Rs. 3,096 Crore](https://image.slidesharecdn.com/regulatorsinindia-150109040916-conversion-gate01/85/Regulators-in-india-45-320.jpg)
![PUBLIC COMPANIES:-
1. Hindustan Machine Tools Limited:-
HMT Limited, formerly Hindustan Machine Tools Limited, is a state-owned
manufacturing company under the Ministry of Heavy Industries and Public
Enterprises in India.[1] The company manufactures tractors, watches under its watch
division and industrial machines and tools mainly under its Praga division[2] It has a work
force of 2,806 with manufacturing units located
at Bangalore, Pinjore, Kalamassery, Hyderabad and Ajmer
2. Powergrid Corporation of India Limited :-
The Power Grid Corporation of India Limited (POWERGRID),
(NSE: POWERGRID, BSE: 532898) is an Indian state-ownedelectric utilities company
headquartered in Gurgaon, India. POWERGRID transmits about 50% of the total power
generated in India on its transmission network. Its subsidiary company, Power System
Operation Corporation Limited (POSOCO) handles power management for Power Grid.
POWERGRID also operates a telecom business under the name POWERTEL
3. Bharat Heavy Electricals Limited:-
Bharat Heavy Electricals Limited (BHEL) owned by Government of India, is a power plant
equipment manufacturer and operates as an engineering and manufacturing company
based in New Delhi, India. Established in 1964, BHEL is India's largest engineering and
manufacturing company of its kind. The company has been earning profits continuously
since 1971-72 and paying dividends uninterruptedly since 1976-77.
4. Oil India Limited:-
Oil India Limited (OIL) is the second largest hydrocarbon exploration & production (E&P)
Indian public sector company and operational headquarters in Duliajan, Assam, India](https://image.slidesharecdn.com/regulatorsinindia-150109040916-conversion-gate01/85/Regulators-in-india-46-320.jpg)
![and also made discovery of oil & gas in Gabon as an Operator and Libya as non-
operator. OIL acquired Shale oil asset in USA during 2012.
In recent years, OIL has stepped up E & P activities significantly in the North-East India.
OIL has set up the NEF (North East Frontier) project to intensify its exploration activities
in the frontier areas in North East, which are logistically very difficult and geologically
complex. Presently, exploration activities are in progress along the Trust Belt areas of
Arunachal, Assamincluding Mizoram. The Company operates a crude oil pipeline in the
North East for transportation of crude oil produced by both OIL and ONGCL in the region
to feed Numaligarh, Guwahati, Bongaigaon and Barauni refineries and a branch line to
feed Digboi refinery.
5. Indian Airlines:-
Indian, formerly Indian Airlines (Indian Airlines Limited from 1993 and Indian Airlines
Corporation from 1953 to 1993) was a major Indian airline based in Delhi and focused
primarily on domestic routes, along with several international services to neighbouring
countries in Asia. It was state-owned, and was administered by the Ministry of Civil
Aviation. It was one of the two flag carriers of India, the other being Air India. The airline
officially merged into Air India on 27 February 2011.
On 7 December 2005, the airline was rebranded as Indian for advertising purposes as a
part of a program to revamp its image in preparation for an initial public
offering (IPO).[1] The airline operated closely with Air India, India's national
carrier. Alliance Air, a fully owned subsidiary of Indian, was renamed Air India
Regional.[2]
In 2007, the Government of India announced that Indian would be merged into Air
India. As part of the merger process, a new company called the National Aviation
Company of India Limited (now called Air India Limited) was established, into which
both Air India (along with Air India Express) and Indian (along with Alliance Air) would be](https://image.slidesharecdn.com/regulatorsinindia-150109040916-conversion-gate01/85/Regulators-in-india-48-320.jpg)
![- The period for which the individual/firm has held office as auditor prior to the commencement
of the Act shall be taken into account for calculating the period of 5 or 10 years, as the case
may be.
- The incoming auditor/audit firm shall not be eligible if such auditor/audit firm is associated
with the outgoing auditor/audit firm under the same network of audit firms.
Here, “same network” includes the firms operating or functioning, hitherto or in future, under
the same brand name, trade name or common control.
For the purpose of rotation of auditors,-
(a) a break in the term for a continuous period of five years shall be considered as fulfilling the
requirement of rotation;
(b) if a partner, who is in charge of an audit firm and also certifies the financial statements of
the company, retires from the said firm and joins another firm of chartered accountants, such
other firm shall also be ineligible to be appointed for a period of five years.
Illustration explaining rotation in case of audit firm :
Number of consecutive
years for which an audit
firm has been
functioning as auditor in
the same company [in
the first AGM held after
the commencement of
provisions of section
139(2)]
Maximum number of
consecutive years for
which the firm may be
appointed in the same
company (including
transitional period)
Aggregate period
which the firm would
complete in the same
company in view of
column I and II
I II III
10 years (or more than
10 years)
3 years 13 years or more](https://image.slidesharecdn.com/regulatorsinindia-150109040916-conversion-gate01/85/Regulators-in-india-61-320.jpg)
![performance-related data to international organizations. The largest databank can be found
at MIX atwww.mixmarket.org
vii. Financial Inclusion:-
Financial inclusion or inclusive financing is the delivery of financial services at affordable
costs to sections of disadvantaged and low-income segments of society, in contrast to
financial exclusion where those services are not available or affordable. An estimated
2.5 billion working-age adults globally have no access to the types of formal financial
services delivered by regulated financial institutions. For example in Sub-Saharan Africa
only 24% of adults have a bank account even though Africa's formal financial sector has
grown in recent years.[1] It is argued that as banking services are in the nature of public
good; the availability of banking and payment services to the entire population without
discrimination is the prime objective of financial inclusion public policy.
Goals of Financial inclusion:-
The term "financial inclusion" has gained importance since the early 2000s, a result of findings
about financial exclusion and its direct correlation to poverty. The United Nations defines the
goals[2] of financial inclusion as follows:
access at a reasonable cost for all households to a full range of financial services, including
savings or deposit services, payment and transfer services, credit and insurance;
sound and safe institutions governed by clear regulation and industry performance
standards;
financial and institutional sustainability, to ensure continuity and certainty of investment;
and
competition to ensure choice and affordability for clients.](https://image.slidesharecdn.com/regulatorsinindia-150109040916-conversion-gate01/85/Regulators-in-india-75-320.jpg)
![In 2007, Grama Vidiyal transformed from a charitable trust to a regulated Non-Bank Financial
Company (NBFC). Its status as an NBFC brings Grama Vidiyal under the purview of government
regulation but will permit the firm to take on larger amounts of equity capital. Grama Vidiyal
expects continued rapid growth, reaching more than two million clients by expanding to other
states of India with an excess of Rs.15 billion (USD 400,000,000) in loans outstanding by 2012
3. Sanghamithra Rural Financial Services:-
Sanghamithra Rural Financial Services (SRFS) is a Section 25 Not for Profit company based in
Bangalore. It was established in 1995, but became fully operational from February 2000. The
company was promoted by MYRADA (Mysore Rehabilitation and Development Agency), a
leading NGO in Karnataka with the core objective of reaching out to the unreached poor where
the poor cannot access credit from formal financial institutions at affordable rate of interest
and at right time. August 31 2012, SRFS had 1.2 lakh active members across 22 districts of
Karnataka, Tamil Nadu, Andhra Pradesh (AP) and Maharashtra. As in August 2012, about 75% of
the portfolio was in Karnataka, 24.6% in Tamil Nadu and remaining in districts of AP and
Maharashtra. Significant share of SRFS’s entire portfolio comprises of the SHG loan product
extended for income generating purposes to poor women (their other product, Housing loan
product and water & sanitation loans constitute a small share in the portfolio). The company’s
30+ delinquency level for the overall portfolio of SRFS was 2.06% as on August 31, 2012. As
mentioned, SRFS is a not for profit organization, which was started with funds from MYRADA.
Being a section 25 company, the company need not have any equity on its books. Post its
commencement of operations, they have received funds and grants from many individuals and
entities focused on social development.In the first six months of the current financial year, SRFS
reported a provisional net profit of Rs. 1.6 crore on a provisional total income of Rs. 8.8 crore.
During 2011-12, the company reported a net profit of Rs. 1.5 crore on a total income of Rs. 14.8
crore.
ICRA has reaffirmed the [ICRA]BB (pronounced ICRA double B) rating to the Rs. 100.00 crore
long term bank loans of Sanghamithra Rural Financial Services (SRFS or the Company)†. The
outlook on the long term rating is stable. The rating continues to factor in SRFS’s currently](https://image.slidesharecdn.com/regulatorsinindia-150109040916-conversion-gate01/85/Regulators-in-india-78-320.jpg)
![4. Detail report on any 5 Cooperatives in India:-
1. AMUL:-
Amul is an Indian dairy cooperative, based at Anand in the state of Gujarat, India.[2] The
word amul (अमूल) is derived from the Sanskritword amulya (अमूल्य), meaning priceless.[3] The
co-operative was initially referred to as Anand Milk Federation Union Limited hence the name
AMUL.
Formed in 1946, it is a brand managed by a cooperative body, the Gujarat Co-operative Milk
Marketing Federation Ltd. (GCMMF), which today is jointly owned by 3 million milk producers
in Gujarat.[4]
Amul spurred India's White Revolution, which made the country the world's largest producer of
milk and milk products.[5] In the process Amul became the largest food brand in India and has
ventured into markets overseas.
Dr Verghese Kurien, founder-chairman of the GCMMF for more than 30 years (1973–2006), is
credited with the success of Amul.[6]
History
Amul the co-operative registered on 1 December 1946 as a response to the exploitation of
marginal milk producers by traders or agents of the only existing dairy, the Polson dairy, in the
small city distances to deliver milk, which often went sour in summer, to Polson. The prices of](https://image.slidesharecdn.com/regulatorsinindia-150109040916-conversion-gate01/85/Regulators-in-india-90-320.jpg)
![milk were arbitrarily determined. Moreover, the government had given monopoly rights to
Polson to collect milk from mikka and supply it to Bombay city.[7][8]
Angered by the unfair trade practices, the farmers of Kaira approached Sardar Vallabhbhai
Patel under the leadership of local farmer leader Tribhuvandas K. Patel. He advised them to
form a cooperative and supply milk directly to the Bombay Milk Scheme instead of Polson (who
did the same but gave them low prices).[9] He sent Morarji Desai to organise the farmers. In
1946, the milk farmers of the area went on a strike which led to the setting up of the
cooperative to collect and process milk.[8] Milk collection was decentralized, as most producers
were marginal farmers who could deliver, at most, 1–2 litres of milk per day. Cooperatives were
formed for each village, too.[10]
The cooperative was further developed and managed by Dr.Verghese Kurien with H.M. Dalaya.
Dalaya's innovation of making skim milk powder from buffalo milk (for the first time in the
world) and a little later, with Kurien's help, making it on a commercial scale,[11] led to the first
modern dairy of the cooperative at Anand, which would compete against established players in
the market.
The trio's (T. K. Patel, Kurien and Dalaya's) success at the cooperative's dairy soon spread to
Anand's neighbourhood in Gujarat. Within a short span, five unions in other districts –
Mehsana, Banaskantha, Baroda, Sabarkantha and Surat – were set up.[8] To combine forces and
expand the market while saving on advertising and avoid competing against each other, the
GCMMF, an apex marketing body of these district cooperatives, was set up in 1973. The Kaira
Union, which had the brand name Amul with it since 1955, transferred it to GCMMF.[12]
In 1999, it was awarded the "Best of all" Rajiv Gandhi National Quality Award.[13]
Adding to the success, Dr. Madan Mohan Kashyap (faculty Agricultural and Engineering
Department, Punjab Agricultural University Ludhiana), Dr. Bondurant (visiting faculty) and Dr
Feryll (former student of Dr Verghese Kurien), visited the Amul factory in Gujarat as a research
team headed by Dr. Bheemsen. Shivdayal Pathak (ex-director of the Sardar Patel Renewable
Energy Research Institute) in the 1960s. A milk pasteurization systemat the Research Centre of
Punjab Agricultural University (PAU) Ludhiana was then formed under the guidance of Kashyap.](https://image.slidesharecdn.com/regulatorsinindia-150109040916-conversion-gate01/85/Regulators-in-india-91-320.jpg)
![About GCMMF
The GCMMF is the largest food products marketing organisation of India. It is the apex
organisation of the dairy cooperatives of Gujarat. It is the exclusive marketing organisation for
products under the brand name of Amul and Sagar.[14] Over the last five and a half decades,
dairy cooperatives in Gujarat have created an economic network that links more than
3.1 million village milk products with millions of consumers in India.[citationneeded] The daily milk
procurement of GCMMF is around 13 million liters per day. It collects milk from about 16914
village milk cooperative societies, 17 member unions and 24 districts covering about 3.18
million milk producer members. More than 70% of the members are small or marginal farmers
and landless laborers including a sizeable population of tribal folk and people belonging to the
scheduled castes.[14]
The three-tier "Amul Model"
The Amul Model is a three-tier cooperative structure. This structure consists of a dairy
cooperative society at the village level affiliated to a milk union at the district level which in
turn is federated into a milk federation at the state level. Milk collection is done at the village
dairy society, milk procurement and processing at the District Milk Union and milk and milk
products marketing at the state milk federation. The structure was evolved at Amul in Gujarat
and thereafter replicated all over the country under the Operation Flood programmer. It is
known as the 'Amul Model' or 'Anand Pattern' of dairy cooperatives.
The main functions of the VDCS are:
Collection of surplus milk from the producers of the village and payment based on quality
and quantity,
Providing support services to the members like veterinary first aid, artificial insemination
services, cattle-feed sales, mineral mixture sales, fodder and fodder seed sales, conducting
training on animal husbandry and dairying,
Selling liquid milk for local consumers of the village,
Supplying milk to the District Milk Union.](https://image.slidesharecdn.com/regulatorsinindia-150109040916-conversion-gate01/85/Regulators-in-india-92-320.jpg)
![today collect approximately 23 million kg of milk per day and pay an aggregate amount of more
than Rs. 125 billion to the milk producers in a year.[citation needed]
Impact of the "Amul Model”
The effects of Operation Flood Programme are appraised by the World Bank in an evaluation
report. It has been proved that an investment of Rs. 20 billion over 20 years under Operation
Flood in the 1970s and 80s has contributed in increase of India’s milk production by 40 million
metric tonnes (MMT), i.e., from about 20 MMT pre-Operation Flood to more than 60 MMT at
the end of Operation Flood.
Thus, an incremental return of Rs. 400 billion annually have been generated by an investment
of Rs. 20 billion over 20 years. India’s milk production continues to increase and now stands at
90 MMT(as of 2012). Despite this fourfold increase in production, there has not been a drop in
the prices of milk during the period while production has continued to grow.
Due to this movement, the country’s milk production tripled between the years 1971 and 1996.
Similarly, the per capita milk consumption doubled from 111 gm per day in 1973 to 222 gm per
day in 2000.
The Amul brand
GCMMF (AMUL) has the largest distribution network for any FMCG company. It has nearly 50
sales offices spread all over the country, more than 5000 wholesale dealers and more than
700000 retailers.
Amul became the world's largest vegetarian cheese[15] and the largest pouched-milk brand.
AMUL is also the largest exporter of dairy products in the country. AMUL is available today in
over 40 countries of the world. AMUL is exporting a wide variety of products which include
whole and skimmed milk powder, cottage cheese (Paneer), UHT milk, clarified butter (Ghee)
and indigenous sweets.
The major markets are USA, West Indies, and countries in Africa, the Gulf Region,
and SAARC neighbours, Singapore, The Philippines, Thailand, Japan and China, and others such](https://image.slidesharecdn.com/regulatorsinindia-150109040916-conversion-gate01/85/Regulators-in-india-94-320.jpg)
![as Mauritius, Australia, Hong Kong and a few South African countries. Its bid to enter the
Japanese market in 1994 did not succeed, but it plans to venture again.[16]
In September 2007, Amul emerged as the leading Indian brand according to a survey by
Synovate to find out Asia's top 1000 Brands.[17]
In 2013, Amul was named the Most Trusted brand in the Food and Beverages sector in The
Brand Trust Report, published by Trust Research Advisory,[18] where as in the 2014 edition
of The Brand Trust Report,[19] Amul is ranked 7th in the list of India's Most Trusted Food and
Beverages brands.
Products
Amul's product range includes milk powders, milk, butter, ghee, cheese, Masti
Dahi, Yoghurt, Buttermilk, chocolate, ice cream, cream, shrikhand, paneer, gulab jamuns,
flavoured milk, basundi, Amul Pro brand and others. Amul PRO is a recently launched brown
beverage just like bournevita and horlicks offering whey protein, DHA and essential nutrients.
In January 2006, Amul launched India's first sports drink, Stamina, which competes with Coca
Cola's Powerade and PepsiCo's Gatorade.
Amul offers mithaimate which competes with Milkmaid by Nestle by offering more fat at lower
price.
In August 2007, Amul introduced Kool Koko, a chocolate milk brand extending its product
offering in the milk products segment. Other Amul brands are Amul Kool, a low-calorie thirst
quenching drink; Masti Butter Milk; and Kool Cafe, ready to drink coffee.
Amul's icecreams are made from milk fat and thus are icecreams in real sense of the word,
while many brands in India sell frozen desserts made from vegetable fat.
Amul's sugar-free Pro-Biotic Ice-cream won The International Dairy Federation Marketing
Award for 2007
2. The Adarsh Housing Society:-
The Adarsh Housing Society is a posh, 31 storey building constructed on prime real estate
in Colaba, Mumbai, for the welfare of war widows and personnel of India’s Ministry of Defence.](https://image.slidesharecdn.com/regulatorsinindia-150109040916-conversion-gate01/85/Regulators-in-india-95-320.jpg)
![Over a period of several years, politicians, bureaucrats and military officers allegedly conspired
to bend several rules concerning land ownership, zoning, floor space index and membership get
themselves flats allotted in this cooperative society at below-market rates The scamwas
unearthed in November 2010 which forced the then Chief Minister of Maharashtra, Ashok
Chavan, to resignIn 2011, a report of the Comptroller and Auditor General of India (CAG) said,
"The episode of Adarsh Co-operative Housing Society reveals how a group of select officials,
placed in key posts, could subvert rules and regulations in order to grab prime government land
- a public property - for personal benefit.
In January 2011, the Maharashtra government set up a two-member judicial commission to
inquire into the matter. The commission was headed by retired High Court judge Justice J A
Patil, with N N Kumbhar acting as member secretary. After deposing 182 witnesses over 2
years, the commission submitted its final report in April 2013 to the Maharashtra government.
The report highlighted 25 illegal allotments, including 22 purchases made by proxy.[5] The
report also indicted four former chief ministers of Maharashtra: Ashok Chavan, Vilasrao
Deshmukh, Sushilkumar Shinde and Shivajirao Nilangekar Patil, 2 former urban development
ministers: Rajesh Tope and Sunil Tatkare and 12 top bureaucrats for various illegal acts. The
allottees included Devyani Khobragade.[6][7]
The Central Bureau of Investigation (CBI), the Income Tax Department and the Enforcement
Directorate (ED) are currently investigating allegations that three former chief ministers of
Maharashtra - Sushilkumar Shinde, Vilasrao Deshmukh and Ashok Chavan - were involved in the
scam.
Alleged violations
The Adarsh Society high-rise was constructed in the Colaba locality of Mumbai. This is
considered a sensitive coastal area by the Indian Defence forces and is the location of various
Indian defence establishments.[10] The society is also alleged to have violated Indian
environment ministry rules.[11]
The scamis notable for the fact that it was enacted over a period of ten years and required the
active involvement of successive officials in many crucial posts. Rules and regulations across](https://image.slidesharecdn.com/regulatorsinindia-150109040916-conversion-gate01/85/Regulators-in-india-96-320.jpg)
![many departments and ministries, both at the Centre and the state of Maharashtra, were
flouted or bent to allow for the construction of the building. Some of the more blatant
transgressions included: obtaining a No Objection Certificate (NOC) from the Army towards
construction of the building in a sensitive zone, getting the Mumbai Metropolitan Region
Development Authority (MMRDA) development plan modified, and obtaining another NOC for
residential development in a Coastal Regulation Zone, often through manipulation of records
and misrepresentation of facts. Efforts by honest officers to bring this to the notice of top
officials were ignored.[12]
The issue was first raised in a newspaper report in 2003 but did not evoke any official
reaction.[13] In 2010, it was again raised by various newspapers and TV channels. Questions
were raised about the manner in which apartments in the building were allocated to
bureaucrats, politicians and army personnel who had nothing to do with the Kargil War and the
way in which clearances were obtained for the construction of the building of the Adarsh
Society.[14][15] It had led to the resignation of the then Chief Minister, Ashok Chavan.[16]Some of
the current allottees of the flats in the Adarsh co-operative society building have offered to
return their flats, denying allegations that they were allotted flats because they influenced or
helped, in some manner, the construction of the society by violating the rules.[17]
In an interview to The Hindu published on 26 March 2012, General VK Singh, the Chief of Army
Staff ascribed many of the attempts to malign him during his tenure to, amongst others, those
he described as "the Adarsh lobby", those directly connected to the scam, as well as those who
were affected by his efforts to rid the army of corruption.
3. Mother dairy:-
Mother Dairy, set up in 1974, is a wholly owned subsidiary of National Dairy Development
Board (NDDB) of India. Mother Dairy's range of products include the brands Mother Dairy (milk,
milk products, curd, ice cream, butter, dairy whitener etc), Dhara (range of edible oils) and Safal
(range of fresh fruits and vegetables, frozen vegetables, fruit juices).](https://image.slidesharecdn.com/regulatorsinindia-150109040916-conversion-gate01/85/Regulators-in-india-97-320.jpg)
![Mother Dairy has over the last 3 decades, harnessed the power of farmer cooperatives to
deliver a range of delicious products and bring a smile on your face. In times to come, Mother
Dairy shall strive to remain one of India’s finest food companies.
Quality Standards:-
Mother Dairy is an IS/ ISO 9002, IS 15000 HACCP and IS 14001 EMS certified organization.
Mother Dairy, Delhi has been awarded ISO 9001:2000 (Quality Management Systems), HACCP,
2002 RvA (Food Safety Management Systems) and ISO 14001:2004 (Environmental
Management Systems) Certifications. Moreover, National Accreditation Board accredits its
Quality Assurance Laboratory as per ISO/IEC 17025:1999 for Testing and Calibration
Laboratories, Department of Science and Technology, Government of India.
4. Indian Coffee House:-
The India Coffee Houses were started by the Coffee Board in early 1940s, during British rule. In
the mid 1950s the Board closed down the Coffee Houses, due to a policy change. The thrown-
out workers then took over the branches, under the leadership of the communist leader A. K.
Gopalan and renamed the network as Indian Coffee House. The first Indian Coffee Workers Co-
Operative Society was founded in Bangalore on August 19, 1957. The first Indian Coffee House
was opened in New Delhi on October 27, 1957.[1] Gradually, the Indian Coffee House chain
expanded across the country.
Dates of the formation of the societies:
Place Date of formation
Bangalore August 19, 1957](https://image.slidesharecdn.com/regulatorsinindia-150109040916-conversion-gate01/85/Regulators-in-india-100-320.jpg)
![Delhi October 29, 1957
Pondicherry January 31, 1958
Thrissur February 10, 1958
Lucknow February 02, 1958
Nagpur February 02, 1958
Jabalpur April 4, 1958
Mumbai (Bombay) July 3, 1958
Kolkata (Calcutta) September 13, 1958
Tellicherry July 8, 1958
Pune October 14, 1958
Later Bellary and Madras (Chennai) Societies were separated from their mother societies.
The movement marked its golden jubilee in the year 2007.
Management:-
There are 13 co-operative societies in the country to run the coffee houses. These societies are
governed by managing committees elected from the employees. There is also a federation of
the co-operative societies as the national umbrella organisation to lead these societies."[3].
Kerala:-
Kerala has the largest number of Indian Coffee Houses. Advocate T. K. Krishnan, a Communist
Leader of Thrissur and Nadakkal (N. S.) Parameswaran Pillai, or "Coffee House Pillai" the State
Secretary of the India Coffee Board Labour Union and a thrown-out employee of ICH were the](https://image.slidesharecdn.com/regulatorsinindia-150109040916-conversion-gate01/85/Regulators-in-india-101-320.jpg)
![founders of ICHs in Kerala. The first Indian Coffee House of Kerala was started in Thrissur in
1958. It was also the fourth ICH in the country. It was inaugurated by A. K. Gopalan on March
8, 1958.
There is also an alternative history book about the ICH movement, in Malayalam, the regional
language of Kerala - Coffee Housinte Katha or History of Coffee House by Nadaakkal
Parameswaran Pillai. This is the only published written history of ICH movement in any
language. All details of the movement referred in this article is based on that book.
Kolkata:-
The Indian Coffee House has several branches in Kolkata, including the College
Street branch, Central Avenue branch, Medical College Kolkata branch and Jadavpur branch.
These are favourite hang-out places among the students and youth, although one can see
several old-timers frequenting the coffee houses on a regular basis.
Coffee House at College Street:-
The most famous Coffee House branch in Kolkata is the one at the College Street, also known as
the "Coffee House at College Street". It is situated opposite the Presidency College, Kolkata and
has been for a long time a regular hang out for students (and ex-students) of the Presidency
College, University of Calcutta, and other institutions in College Street.
The history of the Coffee House at College Street can be traced to Albert Hall, which was
founded in April 1876.[4] Later, the Coffee Board decided to start a coffee joint from the Albert
Hall in 1942. Notable citizens, including Rabindranath Tagore and Subhas Chandra Bose, were
frequent visitors to the place.[5] In 1947, the Central Government changed the name of the
place to "Coffee House".[6] The place became a meeting place for the poets, artistes, literati and
people from the world of art and culture. In 1958, the management decided to shut down the
Coffee House, but it was re-opened the same year, after professors of Presidency College and
Calcutta University rushed off a special petition to the government, to save the heritage place.](https://image.slidesharecdn.com/regulatorsinindia-150109040916-conversion-gate01/85/Regulators-in-india-102-320.jpg)
![The prestige of the Coffee House increased with regular visitors such as Satyajit Ray, Manna
Dey, Amartya Sen, Mrinal Sen and Aparna Sen[6] The Coffee House is of historical significance
for being the rendezvous of innumerable versatile people, from its inception to date. Scholars,
editors, artists and writers like Jagadish Chandra Bose, Ritwik Ghatak, Narayan
Gangopadhyay, Sunil Gangopadhyay, Sanjeev Chattopadhyay, Samaresh Majumdar, Subhas
Mukhopadhyay and Shakti Chattopadhyay) have been just a few among the patrons of the
restaurant. Several literary magazines owe their origin to the inspiration from the adda sessions
at this coffee house.
Though popularly known as College Street Coffee house, this branch is actually on Bankim
Chatterjee Street. The coffee house is famous for its adda sessions, and as the breeding place of
several political and cultural personalities and movements. Many people come here just for the
sake of adda and just being a part of the long talking sessions. Several talented and illustrious
persons from different streams have been thronging this renowned adda for a long time.
In 2006, a huge financial crunch kept the co-operative society from undertaking renovation of
the coffee house. Though a few companies such as Asian Paints approached the society with
offers to renovate the restaurant, the offers were refused due to clash of norms and
conditions.[5]
Other places:-
The Indian Coffee House branch in Sector 17 of Chandigarh was opened in 1964 and remained
popular among professionals, journalists, doctors, bureaucrats, lawyers and senior officials.[7].
The branch originally operated in Sector 22, and was shifted to Sector 17 in 1971. The Coffee
House on the Punjab University campus is popular among students.
The Indian Coffee House branch in Dharamsala used to be a popular hang-out of intelligentsia
in the city. It was set up, after the district administration approached the Indian Coffee
Workers' Co-operative Society, Delhi in 1991. The society decided to close it down in 2006,
after losses ran over 35 lakh rupees.](https://image.slidesharecdn.com/regulatorsinindia-150109040916-conversion-gate01/85/Regulators-in-india-103-320.jpg)
Uploaded byPranjal Varma
Regulators in india
This document provides information about the regulatory framework for foreign direct investment (FDI) and foreign institutional investment (FII) in India. It discusses the history and liberalization of FDI policies in India. It outlines the sectors that allow FDI and the caps on foreign ownership. It also discusses the legal basis and procedures for FDI approval. For FIIs, it defines what an FII is, the eligible entities, and the registration process with SEBI.
Regulators in india
- 1. Your name: VarmaPranjal Roll no: 13011114 Specialization: Finance Course: Financial regulatory Framework Academic Year: AY 2014-15 Name of the tutorial: Presentation on website report A. REGULATORY FRAMEWORK FOR FDI:- In India, FDI is considered as a development tool, which can help in achieving self-reliance in all the sectors of the economy. India’s rich and diversified resources, its sound economic policy, good market conditions and highly skilled human resources, make it a proper destination for investment. Direct Investment across national borders is a distinct feature of international economics, which has gained intense attention of all the countries of the world recently. FDI is the process whereby resident of one country (the home country) acquire ownership of assets for the purpose of controlling the production, distribution and other activities of a firm in another country (the host country). FDI is now approved as an important driver of growth in the country. Liberalization refers to relaxation of previous government restrictions usually in areas of social and economic policies. Liberalization was introduced in1991 in India. The pre economic liberalization period was challenge for the Indian economy to grow because there were many constraints to overcome. Actually in the early1980s, Indian government adopted a liberal policy towards FDI, especially in high technology areas and exports and it was then that FDI friendly environment was created. In away eighties were the fore-runners of the liberalization policy of 1990s and so this period is termed as pre liberalization period in the study. The period after
- 2. 1991 is termedas post liberalization period during which not only the quantum of FDI to India escalated but the sector-wise composition of FDI also underwent incredible change. The post liberalization period was very productive for the Indian economy to head with a swift pace. Though the liberal policy position and strong economic fundamentals appear to have driven the sharp rise in FDI flows in India over past one decade and continued their strength even during the period of global economic crisis (2008-09 and2009-10), the subsequent moderation in investment flows despite faster recovery from the crisis period appears somewhat inexplicable. Survey of empirical literature and analysis seems to suggest that these divergent trends in FDI flows could be the result of certain institutional factors that reduced the investors „sentiments despite continued strength of economic fundamentals. Find. FDI is characterized as any form of long-term investment that earns interest in an enterprise which functions outside the domestic territory of the investor. In an era of globalization and liberalization, Foreign Direct Investment(FDI) is a good source of flow of private foreign capital to the developing countries as it adds to the domestic resources of the recipient country. Unlike borrowings from foreign resources, which involves contractual obligation from the first day, direct foreign investments does not involve any fixed charges and dividends, which would have to be paid only when the firm earns profit. Consequently, FDI leads to increase in Profits, Gross Domestic Product (GDP), Aggregate Employment and Foreign Trade of the recipient country. FDI is an important tool in the economic development of the nation. Contribution of FDI through financial resources, technology and innovative techniques raises overall productivity of diverse sectors of economy. If properly navigated, it also acts as a catalyst for development of sectors such as agriculture, manufacturing, service, SME and many more. Indian retail sector is one of the most sought after sectors that carry great potential for attracting FDI. The sector is rightly projected as sunrise sector of India. The growth of retail, especially in 21st century is mind boggling and attracting the attention of retailers world over. With steady entry of top global retailers such as Wal Mart, Tesco, Carrefour and many more in last couple of years despite conservative approach of the government, the sector has
- 3. become more fascinatingfor research study. The recent decision of Indian government of opening up the sector for FDI in single and multi brand retail has stirred up the heat with intense agitation activities witnessed all over India. The whole issue needs dispassionate view from all - intelligentsia, corporate world as well as from government so that Indian retail sector benefits in its onward march of progress. Foreign investment is investment in an enterprise by a Non-Resident irrespective of whether this involves new equity capital or re-investment of earnings. Foreign investment is of two kinds – (i) Foreign Direct Investment (FDI) and (ii) Foreign Portfolio Investment. FDI is defined under Dictionary of Economics as ―Investment in a foreign country through the acquisition of a local company or the establishment thereof an operation on a new site. It refers to capital inflow from abroad. It is a form of long term international capital movement, made for the purpose of productive activity and accompanied by the intention of managerial control or participation in the management of foreign firm. International Monetary Fund (IMF) and Organization for Economic Cooperation and Development(OECD) define FDI similarly as a category of cross border investment made by a resident in one economy (the direct investor) with the objective of establishing a lasting interest‘ in an enterprise (the direct investment enterprise) that is resident in an economy other than that of the direct investor. Regulatory Framework for FDI in India Indian companies can receive FDI under two routes- 1. Automatic Route – It does not require prior approval either of Reserve Bank of India (RBI) or government. It is allowed in all activities / sectors except where the provision of consolidated FDI policy paragraphs ―Entry route for investment issued by government of India from time to time is attracted. 2. Government Route –Government route means that investment in the capital of resident entities by non-resident entities can be made only with the prior approval from FIPB, Ministry of Finance or SIA, DIPP as the case may be. FDI in sectors, not covered under automatic route requires prior approval of the government which is considered by Foreign Investment
- 4. Promotion Board (FIPB),Department of Economic Affairs, and Ministry of Finance. Following sectors require prior approval of Government of India. 1. Sectors prohibited for FDI - retail trading, lottery business, atomic energy, gambling and betting, business of chit fund, agriculture and plantation, nidhi companies, housing and real estate business. 2. Activities that require industrial license 3. Proposals in which the foreign collaborator has existing financial / technical collaboration in India in the same field. 4. Proposals for acquisition of shares in an existing Indian company in financial services and where Securities Exchange Board of India (SEBI) regulation, 1977 is attracted. 5. All proposal falling outside notified sectoral policy in which FDI is not permitted.The Legal basis Foreign Direct Investment by non-resident in resident entities through transfer or issue of security to person resident outside India is a ‗Capital account transaction and Government of India and Reserve Bank of India regulate this under the FEMA, 1999 and its various regulations. Keeping in view the current requirements, the Government from time to time comes up with new regulations and amendments/changes in the existing ones through order/allied rules, Press The Department of Industrial Policy and Promotion (DIPP), Ministry of Commerce & Industry, Government of India makes policy pronouncements on FDI through Press Notes/ Press Releases which are notified by the Reserve Bank of India as amendment to notification No. FEMA 20/2000-RB dated May 3, 2000. These notifications take effect from the date of issue of Press Notes/ Press Releases. The procedural instructions are issued by the Reserve Bank of India vide Circulars. The regulatory framework over a period of time thus consists of Acts, Regulations, Press Notes, Press Releases, Clarifications, etc. This circular consolidates into one document all the prior policies/regulations on FDI which are contained in FEMA, 1999, RBI Regulations under FEMA, 1999 and Press Notes/Press Releases/Clarifications issued by DIPP and reflects the current policy framework‘ on FDI. It deals comprehensively with all aspects of
- 5. FDI Policy whichare covered under the various Press Notes/Press Releases/ Clarifications issued by DIPP. Sector Specific Limits of Foreign Investment in India Sector FDI Cap/Equity Entry Route Other Conditions A. Agriculture 1. Floriculture, Horticulture, Development of Seeds, Animal Husbandry, Pasic culture ,Aquaculture, Cultivation of vegetables & mushrooms and services related to agro and allied sectors 2. Tea sector, including plantation (FDI is not allowed in any other agricultural sector /activity) 100% 100% Automatic FIPB B. Industry 1. Mining covering exploration and mining of diamond & precious stones; Gold, silver 100% Automatic
- 6. and minerals. 2. Coal andlignite mining for captive consumption by power projects and iron & steel, cement production. 3. Mining and mineral separation of titanium bearing minerals 100% 100% Automatic FIPB C. Manufacturing 1. Alcohol-Distillation & Brewing 2. Coffee & Rubber processing & Warehousing 3. Defense production 4. Hazardous chemicals and isocyanides 5. Industrial explosives - Manufacture 6. Drugs and Pharmaceuticals 7. Power including generation (except Atomic energy); transmission, distribution and 100% 100% 26% 100% 100% 100% 100% Automatic Automatic FIPB Automatic Automatic Automatic Automatic
- 7. power trading. (FDIis not permitted for generation, transmission & distribution of electricity produced in atomic power plant/atomic energy since private investment in this activity is prohibited and reserved for public sector.) D. Services 1. Civil aviation (Greenfield projects and Existing projects) 2. Asset Reconstruction companies 3. Banking (private) sector 4. NBFCs: underwriting, portfolio management services, investment advisory services, financial consultancy, stock broking, asset management, 100% 49% 74% (FDI+FII). FII not to exceed49% 100% Automatic FIPB Automatic Automatic s.t.minimum capitalisation norms
- 8. venture capital, custodian, factoring,leasing and finance, housing finance, forex broking etc. 5. Broadcasting a. FM Radio b. Cable network; c. Direct to home d. Hardware facilities such as up-linking, HUB. e. Up-linking a news and current affairs TV Channel 6. Commodity Exchanges 7. Insurance 8. Petroleum and natural gas a. Refining 20% 49% (FDI+FII) 100% 49% (FDI+FII) (FDI 26,% FII 23%) 26% FIPB FIPB Automatic FIPB (for PSUs).
- 9. 9. Print Media a.Publishing of newspaper and periodicals dealing with news and current affairs b. Publishing of scientific magazines / speciality journals/periodicals 10. Telecommunications a. Basic and cellular, unified access services, national /international long-distance, V-SAT, public mobile radio trunked services (PMRTS), global mobile personal communication services (GMPCS) and others. 49% (PSUs). 100% (Pvt. Companies) 26% 100% 74% (including FDI,FII, NRI, FCCBs,ADRs/GDRs, convertible Automatic (Pvt.) FIPB FIPB Automatic up to 49% and FIPB beyond 49%. Clearance from IRDA S.t.guidelines by Ministry of Information & Broadcasting
- 10. preference shares, etc. Example:- Capital controlsagainst FDI in aviation: An example of bad governance in India FDI in aviation was liberalised by the Reserve Bank of India on September 21, 2012 through a change in the Foreign Exchange Management (Transfer or Issue of Security by a Person Resident outside India) Regulations, 2000 (link). Following that change, private players began putting together a number of complex transactions between Indian and foreign companies such as Jet-Etihad, AirAsia-Tata, and Tata-Singapore Airlines. On November 20, 2013, the Directorate General of Civil Aviation (DGCA) revised its `Civil Aviation Requirements' or "CAR" (CAR 4.1.5 to 4.1.16) to state that a domestic airline company cannot enter into an agreement with a foreign investing entity (including foreign airlines) that may give such foreign entity a right to control the management of the domestic operator ( link). This change in regulations has major consequences for some of the transactions which are in progress. B. REGULATORY FRAMEWORK FOR FII:- The foreign investment is necessary for all developing nation as well as developed nation but it may differ from country to country. The developing economies are in a most need of these foreign investments for boosting up the entire development of the nation in productivity of the labour, machinery etc. The foreign investment or foreign capital helps to build up the foreign
- 11. exchange reserves neededto meet trade deficit or we can say that foreign investment provides a channel through which developing countries gain access to foreign capital which is needed most for the development of the nations in the area of industry, telecom, agriculture, IT etc. The foreign investment also affects on the recipient country like it affects on its factor productivity as well as affects on balance of payments. Foreign investment can come in two forms: foreign direct investment and foreign institutional investment. Foreign direct investment involves in direct production activities and in a long and medium term nature. As far as the FIIs concern it is the short term nature and short term investments. FIIs invest in financial markets such as money markets, stock markets and foreign exchange markets. Introduction to Foreign Institutional Investors (FII’s)Since 1990-91, the Government of India embarked on liberalization and economic reforms with a view of bringing about rapid and substantial economic growth and move towards globalization of the economy. As a part of the reforms process, the Government under its New Industrial Policy revamped its foreign investment policy recognizing the growing importance of foreign direct investment as an instrument of technology transfer, augmentation of foreign exchange reserves and globalization of the Indian economy. Simultaneously, the Government, for the first time, permitted portfolio investments from abroad by foreign institutional investors in the Indian capital market. The entry of FIIs seems to be a follow up of the recommendation of the Narsimhan Committee Report on Financial System. While recommending their entry, the Committee, however did not elaborate on the objectives of the suggested policy. The committee only suggested that the capital market should be gradually opened up to foreign portfolio investments. From September 14,1992 with suitable restrictions, Foreign Institutional Investors were permitted to invest in all the securities traded on the primary and secondary markets, including shares, debentures and warrants issued by companies which were listed or were to be listed on the Stock Exchanges in India. While presenting the Budget for 1992-93, the then Finance Minister Dr. Manmohan Singh had announced a proposal to allow reputed foreign investors, such as Pension Funds etc., to invest in Indian capital market Market design in India for foreign institutional investorsForeign Institutional Investors means an institution established or incorporated outside India which proposes to make investment in India in securities. A Working Group for Streamlining of the
- 12. Procedures relating toForeign Institutional Investors, constituted in April, 2003, inter alia, recommended streamlining of SEBI registration procedure, and suggested that dual approval process of SEBI and RBI be changed to a single approval process of SEBI. This recommendation was implemented in December 2003.Currently, entities eligible to invest under the FII route are as follows: As FII: Overseas pension funds mutual funds investment trust asset management company nominee company bank institutional portfolio manager university funds Endowments Foundations Charitable trusts Charitable societies ( a trustee or power of attorney holder incorporated or Established outside India proposing to make proprietary investments or with no single investor holding more than 10 per cent of the shares or units of the fund.) As Sub-accounts: The sub account is generally the underlying fund on whose behalf the FII invests. The following entities are eligible to be registered as sub-accounts
- 13. Partnership firms Private company Publiccompany Pension fund Investment trust Individuals. FIIs registered with SEBI fall under the following categories: 1. Regular FIIs- those who are required to invest not less than 70 % of their investment in equity-related instruments and 30 % in non-equity instruments. 2. 100 % debt-fund FIIs- those who are permitted to invest only in debt instruments. The Government guidelines for FII of 1992 allowed, inter-alia, entities such as asset management companies, nominee companies and incorporated/institutional portfolio managers or their power of attorney holders (providing discretionary and non-discretionary portfolio management services) to be registered as Foreign Institutional Investors. While the guidelines did not have a specific provision regarding clients, in the application form the details of clients on whose behalf investments were being made were sought. While granting registration to the FII, permission was also granted for making investments in the names of such clients. Asset management companies/portfolio managers are basically in the business of managing funds and investing them on behalf of their funds/clients. Hence, the intention of the guidelines was to allow these categories of investors to invest funds in India on behalf of their ‘clients’. These ‘clients’ later came to be known as sub-accounts. The broad strategy consisted of having a wide variety of clients, including individuals, intermediated through institutional investors, who would be registered as FIIs in India. FIIs are eligible to purchase shares and convertible debentures issued by Indian companies under the Portfolio Investment Scheme.
- 14. Registration Process ofFIIs: A FII is required to obtain a certificate by SEBI for dealing in securities. SEBI grants the certificate SEBI by taking into account the following criteria: i) The applicant's track record, professional competence, financial soundness, experience, general reputation of fairness and integrity. ii) Whether the applicant is regulated by an appropriate foreign regulatory authority. iii) Whether the applicant has been granted permission under the provisions of the Foreign Exchange Regulation Act, 1973 (46 of 1973) by the Reserve Bank of India for making investments in India as a Foreign Institutional Investor. iv) Whether the applicant is :- a) An institution established or incorporated outside India as a pension fund, mutual fund, investment trust, insurance company or reinsurance company. (b) An International or Multilateral Organization or an agency thereof or a Foreign Governmental Agency or a Foreign Central Bank (c) an asset management company, investment manager or advisor, nominee company, bank or institutional portfolio manager, established or incorporated outside India and proposing to make investments in India on behalf of broad based funds and its proprietary funds in if any or (d) university fund, endowments, foundations or charitable trusts or charitable societies. v) Whether the grant of certificate to the applicant is in the interest of the development of the securities market. vi) Whether the applicant is a fit and proper person. The SEBIs initial registration is valid for a period of three years from the date of its grant of renewal.
- 15. Sectors Percentage Share of Foreign institutional March07 March 08 March 09 March 10 September11 Banks 18.41 19.15 14.27 16.02 17.62 18.17 Engineering 11.45 10.63 7.34 8.28 9.36 9.30 Finance 18.18 17.44 13.01 16.53 23.35 19.20 FMCG 16.34 11.91 14.07 12.72 14.09 16.34 17.00 Information Technology 14.53 16.00 12.44 11.68 21.16 17.07 Infrastructure 7.15 8.86 7.31 8.90 7.87 7.50 Manufacturing 9.57 9.46 7.28 8.79 9.41 9.60 Media & Entertainment 15.20 11.71 11.42 7.06 10.97 11.63 Petrochemicals 5.83 4.73 4.77 6.08 6.52 6.49 Pharmaceuticals 11.17 10.69 7.88 8.78 10.19 10.13 Services 13.09 10.70 8.39 8.05 7.41 9.50 Telecommunication 11.17 9.12 6.85 8.64 8.44 8.46 Miscellaneous 8.19 9.30 8.39 8.10 13.65 13.37
- 16. Total stake ofFIIs in all the Sectors 10.78 10.62 8.40 9.58 10.32 10.45 Example:- Historically, retailers have tried to exploit relationships with supplier. A great example was in the 1970s, when Sears sought to dominate the household appliance market. Sears set very high standards for quality; suppliers that did not meet these standards were dropped from the Sears line. This could also be seen in case of Wal-Mart that places strict control on its suppliers. A contract with a big retailer like Wal-Mart can make or break a small supplier. In retail industry suppliers tend to have very little power. (ADR) American depositary receipt:- Definition:- A negotiable certificate issued by a U.S. bank representing a specified number of shares (or one share) in a foreign stock that is traded on a U.S. exchange. ADRs are denominated in U.S. dollars, with the underlying security held by a U.S. financial institution overseas. ADRs help to reduce administration and duty costs that would otherwise be levied on each transaction. This is an excellent way to buy shares in a foreign company while realizing any dividends and capital gains in U.S. dollars. However, ADRs do not eliminate the currency and economic risks for the underlying shares in another country. For example, dividend payments in euros would be converted to U.S. dollars, net of conversion expenses and foreign taxes and in accordance with the deposit agreement. ADRs are listed on either the NYSE, AMEX or Nasdaq as well as OTC. ADRs are one type of depositary receipt (DR), which are any negotiable securities that represent securities of companies that are foreign to the market on which the DR trades. DRs enable domestic investors to buy securities of foreign companies without the accompanying risks or inconveniences of cross-border and cross-currency transactions.
- 17. Each ADR isissued by a domestic custodian bank when the underlying shares are deposited in a foreign depositary bank, usually by a broker who has purchased the shares in the open market local to the foreign company. An ADR can represent a fraction of a share, a single share, or multiple shares of a foreign security. The holder of a DR has the right to obtain the underlying foreign security that the DR represents, but investors usually find it more convenient to own the DR. The price of a DR generally tracks the price of the foreign security in its home market, adjusted for the ratio of DRs to foreign company shares. In the case of companies domiciled in the United Kingdom, creation of ADRs attracts a 1.5% stamp duty reserve tax (SDRT) charge by the UK government. Depositary banks have various responsibilities to DR holders and to the issuing foreign company the DR represents. 1. Programmes:- When a company establishes an ADR program, it must decide what exactly it wants out of the program, and how much time, effort, and other resources they are willing to commit. For this reason, there are different types of programs, or facilities, that a company can choose. 2. Unsponsored :- Unsponsored shares trade on the over-the-counter (OTC) market. These shares are issued in accordance with market demand, and the foreign company has no formal agreement with a depositary bank. Unsponsored ADRs are often issued by more than one depositary bank. Each depositary services only the ADRs it has issued. As a result of an SEC rule change effective October 2008, hundreds of new ADRs have been issued, both sponsored and unsponsored. The majority of these were unsponsored Level I ADRs, and now approximately half of all ADR programs in existence are unsponsored. A) Sponsored level 1 :- Level 1 depositary receipts are the lowest level of sponsored ADRs that can be issued. When a company issues sponsored ADRs, it has one designated depositary who also acts as its transfer agent.
- 18. A majority ofAmerican depositary receipt programs currently trading are issued through a Level 1 program. This is the most convenient way for a foreign company to have its equity traded in the United States. Level 1 shares can only be traded on the OTC market and the company has minimal reporting requirements with the U.S. Securities and Exchange Commission (SEC). The company is not required to issue quarterly or annual reports in compliance with U.S. GAAP. However, the company must have a security listed on one or more stock exchange in a foreign jurisdiction and must publish in English on its website its annual report in the form required by the laws of the country of incorporation, organization or domicile. Companies with shares trading under a Level 1 program may decide to upgrade their program to a Level 2 or Level 3 program for better exposure in the United States markets. B) Sponsored Level II ADRs ("Listing" facility) Level 2 depositary receipt programs are more complicated for a foreign company. When a foreign company wants to set up a Level 2 program, it must file a registration statement with the U.S. SEC and is under SEC regulation. In addition, the company is required to file a Form 20- F annually. Form 20-F is the basic equivalent of an annual report (Form 10-K) for a U.S. company. In their filings, the company is required to follow U.S. GAAP standards or IFRS as published by the IASB. The advantage that the company has by upgrading their program to Level 2 is that the shares can be listed on a U.S. stock exchange. These exchanges include the New York Stock Exchange (NYSE), NASDAQ, and the American Stock Exchange (AMEX). While listed on these exchanges, the company must meet the exchange’s listing requirements. If it fails to do so, it may be delisted and forced to downgrade its ADR program. C) Sponsored Level iii :- A Level 3 American Depositary Receipt program is the highest level a foreign company can sponsor. Because of this distinction, the company is required to adhere to stricter rules that are similar to those followed by U.S. companies.
- 19. Setting up aLevel 3 program means that the foreign company is not only taking steps to permit shares from its home market to be deposited into an ADR program and traded in the U.S.; it is actually issuing shares to raise capital. In accordance with this offering, the company is required to file a Form F-1, which is the format for an Offering Prospectus for the shares. They also must file a Form 20-F annually and must adhere to U.S. GAAP standards or IFRS as published by the IASB. In addition, any material information given to shareholders in the home market, must be filed with the SEC through Form 6K. Foreign companies with Level 3 programs will often issue materials that are more informative and are more accommodating to their U.S. shareholders because they rely on them for capital. Overall, foreign companies with a Level 3 program set up are the easiest on which to find information. Examples include the British telecommunications company Vodafone(VOD), the Brazilian oil company Petrobras (PBR), and the Chinese technology company China Information Technology, Inc. (CNIT). 3. Restricted Programs:- Foreign companies that want their stock to be limited to being traded by only certain individuals may set up a restricted program. There are two SEC rules that allow this type of issuance of shares in the U.S.: Rule 144-A and Regulation S. ADR programs operating under one of these 2 rules make up approximately 30% of all issued ADRs. 4. Privately placed:- Some foreign companies will set up an ADR program under SEC Rule 144A. This provision makes the issuance of shares a private placement. Shares of companies registered under Rule 144-A are restricted stock and may only be issued to or traded by qualified institutional buyers (QIBs). US public shareholders are generally not permitted to invest in these ADR programs, and most are held exclusively through the Depository Trust & Clearing Corporation, so there is often very little information on these companies. Characteristics include: 1. It is a secured security
- 20. 2. A fixedrate of interest is paid 3. Can be converted into multiple shares 5. Offshore (SEC Regulation S) ADRs:- The other way to restrict the trading of depositary shares to US public investors is to issue them under the terms of SEC Regulation S. This regulation means that the shares are not, and will not be registered with any United States securities regulation authority. Regulation S shares cannot be held or traded by any “U.S. person” as defined by SEC Regulation S rules. The shares are registered and issued to offshore, non-US residents. Regulation S ADRs can be merged into a Level 1 program after the restriction period has expired, and the foreign issuer elects to do this. 6. Sourcing:- One can either source new ADRs by depositing the corresponding domestic shares of the company with the depositary bank that administers the ADR program or, instead, one can obtain existing ADRs in the secondary market. The latter can be achieved either by purchasing the ADRs on a US stock exchange or via purchasing the underlying domestic shares of the company on their primary exchange and then swapping them for ADRs; these swaps are called crossbook swaps and on many occasions account for the bulk of ADR secondary trading. This is especially true in the case of trading in ADRs of UK companies where creation of new ADRs attracts a 1.5% stamp duty reserve tax (SDRT) charge by the UK government; sourcing existing ADRs in the secondary market (either via crossbook swaps or on exchange) instead is not subject to SDRT. 7. Termination:- Most ADR programs are subject to possible termination. Termination of the ADR agreement will result in cancellation of all the depositary receipts, and a subsequent delisting from all exchanges where they trade. The termination can be at the discretion of the foreign issuer or the depositary bank, but is typically at the request of the issuer. There may be a number of
- 21. reasons why ADRsterminate, but in most cases the foreign issuer is undergoing some type of reorganization or merger. Owners of ADRs are typically notified in writing at least thirty days prior to a termination. Once notified, an owner can surrender their ADRs and take delivery of the foreign securities represented by the Receipt, or do nothing. If an ADR holder elects to take possession of the underlying foreign shares, there is no guarantee the shares will trade on any US exchange. The holder of the foreign shares would have to find a broker who has trading authority in the foreign market where those shares trade. If the owner continues to hold the ADR past the effective date of termination, the depositary bank will continue to hold the foreign deposited securities and collect dividends, but will cease distributions to ADR owners. Usually up to one year after the effective date of the termination, the depositary bank will liquidate and allocate the proceeds to those respective clients. Many US brokerages can continue to hold foreign stock, but may lack the ability to trade it overseas. (GDRs) Global Depositary Receipts:- A Global depository receipt (GDR) also known as International depository receipt (IDR), is a certificate issued by a depository bank, which purchases shares of foreign companies and deposits it on the account. They are the global equivalent of the original American Depository Receipts (ADR) on which they are based. GDRs represent ownership of an underlying number of shares of a foreign company and are commonly used to invest in companies from developing or emerging markets by investors in developed markets. Prices of global depositary receipt are based on the values of related shares, but they are traded and settled independently of the underlying share. Typically 1 GDR is equal to 10 underlying shares, but any ratio can be used. It is a negotiable instrument which is denominated in some freely convertible currency.[1] GDRs enables a company (issuer) to access investors in capital markets outside of its home country.
- 22. Several international banksissue GDRs, such as JPMorgan Chase, Citigroup, Deutsche Bank, The Bank of New York Mellon. GDRs are often listed in the Frankfurt Stock Exchange, Luxembourg Stock Exchange and in the London Stock Exchange, where they are traded on the International Order Book (IOB). Characteristic:- 1. it is an unsecured security 2. it may be converted into number of shares 3. interest and redemption price is public in foreign agency 4. it is listed and traded in the stock exchange usage:- If for example an Indian Company which has issued ADRs in the American market wishes to further extend it to other developed and advanced countries such as Europe, then they can sell these ADRs to the public of Europe and the same would be named as GDR. (ECB) external commercial borrowing :- An external commercial borrowing (ECB) is an instrument used in India to facilitate the access to foreign money by Indian corporations and PSUs (public sector undertakings). ECBs include commercial bank loans, buyers' credit, suppliers' credit, securitised instruments such as floating rate notes and fixed rate bonds etc., credit from official export credit agencies and commercial borrowings from the private sector window of multilateral financial Institutions such as International Finance Corporation (Washington), ADB, AFIC, CDC, etc. ECBs cannot be used for investment in stock market or speculation in real estate. The DEA (Department of Economic Affairs), Ministry of Finance, Government of India along with Reserve Bank of India, monitors and regulates ECB guidelines and policies. For infrastructure and
- 23. greenfield projects, fundingup to 50% (through ECB) is allowed. In telecom sector too, up to 50% funding through ECBs is allowed. Recently Government of India has increased limits on RBI to up to $40[1] billions and allowed borrowings in Chinese currency yuan. Borrowers can use 25 per cent of the ECB to repay rupee debt and the remaining 75 per cent should be used for new projects. A borrower can not refinance its existing rupee loan through ECB. The money raised through ECB is cheaper given near-zero interest rates in the US and Europe, Indian companies can repay their existing expensive loans from that. (FEMA)Foreign Exchange Management Act,1999:- The Foreign Exchange Management Act, 1999 (FEMA) is an Act of the Parliament of India "to consolidate and amend the law relating to foreign exchange with the objective of facilitating external trade and payments and for promoting the orderly development and maintenance of foreign exchange market in India". It was passed in the winter session of Parliament in 1999, replacing the Foreign Exchange Regulation Act (FERA). This act seeks to make offenses related to foreign exchange civil offenses. It extends to the whole of India.,[1] replacing FERA, which had become incompatible with the pro-liberalization policies of the Government of India. It enabled a new foreign exchange management regime consistent with the emerging framework of the World Trade Organization (WTO). It also paved way to Prevention of Money Laundering Act 2002, which was effected from 1 July 2005. Unlike other laws where everything is permitted unless specifically prohibited, under this act everything was prohibited unless specifically permitted. Hence the tenor and tone of the Act was very drastic. It required imprisonment even for minor offences. Under FERA a person was presumed guilty unless he proved himself innocent, whereas under other laws a person is presumed innocent unless he is proven guilty. Switch for FERA:-
- 24. FERA, in placesince 1975, did not succeed in restricting activities such as the expansion of transnational corporations (TNCs). The concessions made to FERA in 1991-1993 showed that FERA was on the verge of becoming redundant.[3] After the amendment of FERA in 1993, it was decided that the act would become the FEMA. This was done in order to relax the controls on foreign exchange in India, as a result of economic liberalization. FEMA served to make transactions for external trade (exports and imports) easier – transactions involving current account for external trade no longer required RBI’s permission. The deals in Foreign Exchange were to be ‘managed’ instead of ‘regulated’. The switch to FEMA shows the change on the part of the government in terms of foreign capital.[4] Need for management:- The buying and selling of foreign currency and other debt instruments by businesses, individuals and governments happens in the foreign exchange market. Apart from being very competitive, this market is also the largest and most liquid market in the world as well as in India.[5] It constantly undergoes changes and innovations, which can either be beneficial to a country or expose them to greater risks. The management of foreign exchange market becomes necessary in order to mitigate and avoid the risks. Central banks would work towards an orderly functioning of the transactions which can also develop their foreign exchange market.[6] Whether under FERA or FEMA’s control, the need for the management of foreign exchange is important. It is necessary to keep adequate amount of foreign exc from Import Substitution to Export Promotion. Main feature:- Activities such as payments made to any person outside India or receipts from them, along with the deals in foreign exchange and foreign security is restricted. It is FEMA that gives the central government the power to impose the restrictions. Restrictions are imposed on residents of India who carry out transactions in foreign exchange, foreign security or who own or hold immovable property abroad.
- 25. Without generalor specific permission of the MA restricts the transactions involving foreign exchange or foreign security and payments from outside the country to India – the transactions should be made only through an authorized person. Deals in foreign exchange under the current account by an authorized person can be restricted by the Central Government, based on public interest. Although selling or drawing of foreign exchange is done through an authorized person, the RBI is empowered by this Act to subject the capital account transactions to a number of restrictions. Residents of India will be permitted to carry out transactions in foreign exchange, foreign security or to own or hold immovable property abroad if the currency, security or property was owned or acquired when he/she was living outside India, or when it was inherited by him/her from someone living outside India. Exporters are needed to furnish their export details to RBI. To ensure that the transactions are carried out properly, RBI may ask the exporters to comply to its necessary requirements. B) (FMC) Forward Markets Commission:-. 1. Name of the organization and logo:- Forward Markets Commission:-.
- 26. 2. Year ofestablishment:- 1953 3. Website:- www.fmc.gov.in 4. All about FMC in brief: The Forward Markets Commission (FMC) is the chief regulator of commodity futures markets in India. As of July 2014 for the year 2014-15, it regulated Rs 17 trillion[1] worth of commodity trades in India. It is headquartered in Mumbai and this financial regulatoryagency is overseen by the Ministry of Finance. Commission:- Established in 1953 under the provisions of the Forward Contracts (Regulation) Act, 1952, it consists of not less than two but not exceeding four members appointed by the Central Government, out of them one being nominated by the Central Government to be the Chairman of the Commission. Currently Commission comprises three members among whom Shri Ramesh Abhishek, IAS is the Chairman, Dr. M. Mathisekaran, IES and Shri Nagendraa Parakh are the Members of the Commission. Currently, the Commission allowscommodity trading in 22 exchanges in India, of which 6 are national. Chairman of FMC Mr. Ramesh Abhishek is the Chairman of commodities regulator FMC. He is an IAS Officer of 1982 Batch (Bihar Cadre) and was appointed on 24 September 2012 as the Chairman of
- 27. Forward Market Commission.Mr. Abhishek, an alumnus of the Harvard Kennedy School, holds post graduate degrees in public administration and international relations. Members of FMC 1. Dr M.Mathisekaran Dr M.Mathisekaran belongs to 1981 batch Indian Economic Service. He has Post Graduate Degree in Economics from Madurai Kamraj University, M.Sc (National Development Project Planning) from University of Bradford, UK and Ph.D from University of Madras. Before joining IES, he had worked as Assistant Professor of Economics from 1978 to 1981.After joining IES, he has worked in various capacities in different organizations of the Government of India. He had worked in the Programme Evaluation Organization of Planning Commission in the regional offices at Hyderabad, Mumbai and Chennai. He had also worked as Chief Vigilance Officer in the Tuticorin Port Trust and General Manager (Vigilance) in Food Corporation of India. He was on deputation with Tamil Nadu Government from 8.11.2008 to 30.5.2011. Before joining as Member, Forward Markets Commission he has worked as Economic Adviser,FMC from 12.12.2007 to 31.10.2008 and 31.5.2011 to 15.12.2011,As Director,FMC from 9.10.1990 to 5.6.1991 and as Deputy Dirtector,FMC from 27.6.1998 to 15.11.1989. 2. Shri. Nagendra Parakh Shri. Nagendra Parakh is a rank holder Chartered Accountant (CA) and Company Secretary (CS) by professional Qualifications. He qualified CA and CS in 1985-86. Before joining FMC in July 2013, Shri. Parakh was working as Chief General Manager at SEBI, During his career with SEBI since 1994, He was associated in various reforms in the Indian Securities market like on-line trading, demeterialisation, rolling settlement etc. He was key person behind introduction of the Equity Derivatives Market and T+2 rolling settlements in Indian securities Markets. He was SEBI nominee director on the board of Bangalore Stock Exchange, Cochin Stock Exchange, Derivative segment of National Stock Exchange and Derivative segment of The Stock Exchange Mumbai. Besides he has represented SEBI in various
- 28. committees set upby Reserve bank of India, Ministry of Finance and Govt. of India. He was also a member representing India on the Standing committee II of the IOSCO. Nagendra Parakh carries with him varied regulatory experiences of Indian and global Securities market. History:- From 2013 september 09, the commission is overseen by the Department of Economic Affairs, Ministry of Finance. Since futures traded in India are traditionally on food commodities, earlier it was overseen by Ministry of Consumer Affairs, Food and Public Distribution (India).[2] Development of the Industry:- India has a long history of trading commodities and considered the pioneer in some forms of derivatives trading. The first derivative market was set up in 1875 in Mumbai, where cotton futures was traded. This was followed by establishment of futures markets in edible oilseeds complex, raw jute and jute goods and bullion. This became an active industry with volumes reported to be large. However, in 1935 a law was passed allowing the government to in part restrict and directly control food production (Defence of India Act, 1935). This included the ability to restrict or ban the trading in derivatives on those food commodities. Post independence, in the 1950s, India continued to struggle with feeding its population and the government increasingly restricting trading in food commodities. Just at the time the FMC was established, the government felt that derivative markets increased speculation which led to increased costs and price instabilities. And in 1953 finally prohibited options and futures trading altogether.[3] The industry was pushed underground and the prohibition meant that development and expansion came to a halt. In the 1970 as futures and options markets began to develop in the rest of the world, Indian derivatives markets were left behind. The apprehensions about the role of speculation, particularly in the conditions of scarcity, prompted the Government to continue the prohibition well into the 1980s.
- 29. The result ofthe period of prohibition left India with a large number of small and isolated regional futures markets. The futures markets were dispersed and fragmented, with separate trading communities in different regions with little contact with one another. The exchanges had not yet embrace modern technology or modern business practices. 5. Functions of the regulator: The functions of the Forward Markets Commission are as follows: To advise the Central Government in respect of the recognition or the withdrawal of recognition from any association or in respect of any other matter arising out of the administration of the Forward Contracts (Regulation) Act 1952. To keep forward markets under observation and to take such action in relation to them, as it may consider necessary, in exercise of the powers assigned to it by or under the Act. To collect and whenever the Commission thinks it necessary, to publish information regarding the trading conditions in respect of goods to which any of the provisions of the act is made applicable, including information regarding supply, demand and prices, and to submit to the Central Government, periodical reports on the working of forward markets relating to such goods; To make recommendations generally with a view to improving the organization and working of forward markets; To undertake the inspection of the accounts and other documents of any recognized association or registered association or any member of such association whenever it considers it necessary. It allows futures trading in 23 Fibers and Manufacturers, 15 spices, 44 edible oils, 6 pulses, 4 energy products, single vegetable, 20 metal futures, 33 others Futures. 6. Do’s and Don’ts of investing in commodities market:-
- 30.
- 31. 1. Objectives: Toensure that markets efficiently perform the twin economic functions of : Price discovery Price Risk management To maintain market integrity and financial integrity across the market, the Exchanges and the Intermediaries (brokers, warehouses, assayers) etc. 2. Maintaining Financial Integrity:- a) Capital Adequacy of Exchanges and Intermediaries. b) Payment of Adequate Margins by Intermediaries. 3. Maintaining Market Integrity:- a) Effective Surveillance and Monitoring b) Audit of Exchanges and Intermediaries. 4. Ensuring alignment of Future and Spot prices:- a) Threat of Delivery b) Final Settlement based on correct spot prices 5. Investor Protection:- a) Fair and even handed conduct of the Exchanges. b) Protection against unscrupulous Intermediaries 6. Fairness and Transparency in Trading, Clearing and Settlement Process:- a) Demutualized Set up of the Exchanges. b) Electronic Trading c) Corporate Governance in the Exchanges. Act 1952:- 1. Constitution of India lists futures market and stock market in the Union List and the Central Government is given the power to legislate. a) Spot market is regulated by the States.
- 32. 2. Forward Contract(Regulation) Act 1952 enacted. D) Non –Banking Financial Company(NBFC):- 1. Name of the regulator with logo: Non-Banking Financial Company 2. Website: www.nbfc.rbi.org.in 3. All about NBFCs in brief: The financial sector in any economy consists of several intermediaries. Apart from banking entities, there are investment intermediaries (such as mutual funds, hedge funds, pension funds, and so on), risk transfer entities (such as insurance companies), information and analysis providers (such as rating agencies, financial advisers, etc), investment banks, portfolio managers and so on. All such entities that offer financial services other than banking, may be broadly called non- banking financial institutions. What is banking? Banking is commonly understood to mean taking of deposits withdrawable on demand or notice - that is, banks can hold people's deposits
- 33. and promise topay them on demand. There are variety of other entities that may accept deposits - hence, acceptance of deposits is not the essence of banking. In India, the term "non-banking financial companies" acquires a new meaning, and a huge significance. The meaning of the term is such entities which are not banks, and yet carry lending activities almost at par with banks. They may also accept deposits - however, these deposits are term deposits and not call deposits. The significance of non-banking financial companies in India lies in the massive capabilities of NBFCs - short of acceptance of call deposits and remittance function, NBFCs can virtually do everything that a bank can. Compared to this disability, the ease of entry and lightness of regulation applicable to NBFCs makes it a tremendous focus of interest, particularly for foreign investors wanting to enter India's financial sector. For instance, it is possible to hold 100% foreign ownership of NBFCs, while in case of banks, there are serious caps. It is possible to either start an NBFC or buy one of the 17000-odd companies many of which are formed for sale. On the other hand, getting a banking license requires a real penance. A Non-Banking Financial Company (NBFC) is a company registered under the Companies Act, 1956 engaged in the business of loans and advances, acquisition of shares/stocks/bonds/debentures/securities issued by Government or local authority or other marketable securities of a like nature, leasing, hire-purchase, insurance business, chit business but does not include any institution whose principal business is that of agriculture activity, industrial activity, purchase or sale of any goods (other than securities) or providing any services and sale/purchase/construction of immovable property. A non-banking institution which is a company and has principal business of receiving deposits under any scheme or arrangement in one lump sum or in installments by way of contributions or in any other manner, is also a non-banking financial company (Residuary non-banking company).
- 34. Non-bank financial companiesare financial institutions that provide banking services without meeting the legal definition of a bank, i.e. one that does not hold a banking license. These institutions typically are restricted from taking deposits from the public depending on the jurisdiction. Nonetheless, operations of these institutions are often still covered under a countries banking regulations. The specific banking products that can be offered by NBFCs depends on the jurisdiction, and may include services such as loans and credit facilities, savings products, investments and money transfer services. In some jurisdictions, such as New Zealand, any company can engage in banking business, except they are not allowed to use the word bank in their name. A company can only call itself a bank if it is a registered as such with the nation's central bank. Services provided:- NBFCs offer most sorts of banking services, such as loans and credit facilities, private education funding, retirement planning, trading in money markets, underwriting stocks and shares, TFCs(Term Finance Certificate) and other obligations. These institutions also provide wealth management such as managing portfolios of stocks and shares, discounting services e.g. discounting of instruments and advice on merger and acquisition activities. The number of non- banking financial companies has expanded greatly in the last several years as venture capital companies, retail and industrial companies have entered the lending business. Non-bank institutions also frequently support investments in property and prepare feasibility, market or industry studies for companies. However they are typically not allowed to take deposits from the general public and have to find other means of funding their operations such as issuing debt instruments. Regulations:- For European NCs the Payment Services Directive (PSD) is a regulatory initiative from the European Commission to regulate payment services and payment service providers throughout the European Union (EU) and Eurofff Economic Area (EEA). The PSD describes which type of organisations can provide payment services in Europe (credit institutions (i.e. banks) and certain authorities (e.g. Central Banks, government bodies), Electronic Money Institutions
- 35. (EMI), and alsocreates the new category of Payment Institutions). Organisations that are not credit institutions or EMI, can apply for an authorisation as Payment Institution in any EU country of their URL choice (where they are established) and then passport their payment services into other Member States across the EU. 4.Categories of NBFCs: NBFCs are categorized a) in terms of the type of liabilities into Deposit and Non-Deposit accepting NBFCs, b) non deposit taking NBFCs by their size into systemically important and other non-deposit holding companies (NBFC-NDSI and NBFC-ND) c) by the kind of activity they conduct. Within this broad categorization the different types of NBFCs are as follows: i. Asset Finance Company(AFC) : An AFC is a company which is a financial institution carrying on as its principal business the financing of physical assets supporting productive/economic activity, such as automobiles, tractors, lathe machines, generator sets, earth moving and material handling equipments, moving on own power and general purpose industrial machines. Principal business for this purpose is defined as aggregate of financing real/physical assets supporting economic activity and income arising therefrom is not less than 60% of its total assets and total income respectively. ii. Investment Company (IC) : IC means any company which is a financial institution carrying on as its principal business the acquisition of securities, iii. Loan Company (LC): LC means any company which is a financial institution carrying on as its principal business the providing of finance whether by making loans or advances or otherwise for any activity other than its own but does not include an Asset Finance Company.
- 36. iv. Infrastructure FinanceCompany (IFC): IFC is a non-banking finance company a) which deploys at least 75 per cent of its total assets in infrastructure loans, b) has a minimum Net Owned Funds of Rs. 300 crore, c) has a minimum credit rating of ‘A ‘or equivalent d) and a CRAR of 15%. v. Systemically Important Core Investment Company (CIC-ND-SI): CIC-ND-SI is an NBFC carrying on the business of acquisition of shares and securities which satisfies the following conditions:- vi. (a) it holds not less than 90% of its Total Assets in the form of investment in equity shares, preference shares, debt or loans in group companies; (b) its investments in the equity shares (including instruments compulsorily convertible into equity shares within a period not exceeding 10 years from the date of issue) in group companies constitutes not less than 60% of its Total Assets; (c) it does not trade in its investments in shares, debt or loans in group companies except through block sale for the purpose of dilution or disinvestment; (d) it does not carry on any other financial activity referred to in Section 45I(c) and 45I(f) of the RBI act, 1934 except investment in bank deposits, money market instruments, government securities, loans to and investments in debt issuances of group companies or guarantees issued on behalf of group companies. (e) Its asset size is Rs 100 crore or above and (f) It accepts public funds vi. Infrastructure Debt Fund: Non- Banking Financial Company (IDF-NBFC) : IDF-NBFC is a company registered as NBFC to facilitate the flow of long term debt into infrastructure projects. IDF-NBFC raise resources through issue of Rupee or Dollar denominated bonds of
- 37. minimum 5 yearmaturity. Only Infrastructure Finance Companies (IFC) can sponsor IDF- NBFCs. vii. Non-Banking Financial Company - Micro Finance Institution (NBFC-MFI): NBFC-MFI is a non-deposit taking NBFC having not less than 85%of its assets in the nature of qualifying assets which satisfy the following criteria: viii. a. loan disbursed by an NBFC-MFI to a borrower with a rural household annual income not exceeding Rs. 60,000 or urban and semi-urban household income not exceeding Rs. 1,20,000; b. loan amount does not exceed Rs. 35,000 in the first cycle and Rs. 50,000 in subsequent cycles; c.total indebtedness of the borrower does not exceed Rs. 50,000; d. tenure of the loan not to be less than 24 months for loan amount in excess of Rs. 15,000 with prepayment without penalty; e. loan to be extended without collateral; f. aggregate amount of loans, given for income generation, is not less than 75 per cent of the total loans given by the MFIs; g. loan is repayable on weekly, fortnightly or monthly instalments at the choice of the borrower ix. Non-Banking Financial Company – Factors (NBFC-Factors): NBFC-Factor is a non-deposit taking NBFC engaged in the principal business of factoring. The financial assets in the factoring business should constitute at least 75 percent of its total assets and its income derived from factoring business should not be less than 75 percent of its gross income. 5. What are the requirements for registration with RBI?
- 38. A company incorporatedunder the Companies Act, 1956 and desirous of commencing business of non-banking financial institution as defined under Section 45 I(a) of the RBI Act, 1934 should comply with the following: i. it should be a company registered under Section 3 of the companies Act, 1954 ii. It should have a minimum net owned fund of Rs 200 lakh. (The minimum net owned fund (NOF) required for specialized NBFCs like NBFC-MFIs, NBFC-Factors, CICs is indicated separately in the FAQs on specialized NBFCs) 5. Residuary NBFCs: They structure a part of Non-Banking Financial Company however their working is diverse from the normal Nifco Residuary Non-Banking Company is a class of NBFCS whose chief business is accepting of stores, under any plan or arrangement. The stores appropriated don't include venture, asset financing, or credits. These organizations are instructed to uphold speculations as per directions of RBI, notwithstanding fluid possessions. The working of these companies is unique in relation to those of organization enrollment as far as strategy for activation of stores and necessity of arrangement of depositors’ funds. Sahara Mutual Fund was the first RNBC began in India. The exercises of different Nifco are at present controlled by RBI. For this reason, Nifco are essentially separated into two classes viz., those tolerant open stores and those not tolerating open stores. 6. Detail report on any 5 NBFCs in India: 1. Futura:-
- 39. Futura’ today istruly a ‘Complete Polyester Company’, covering the entire range of Polyesters from PET through PBT, PTT, PEN, PTN and PBN! The `Futura’ brand is synonymous with products for the future: Speciality Polyesters for high end application. Futura works with Global Companies such as Pepsi, Coke, GE Plastics, Shell Chemicals, Faerchplast-Denmark, Associated Packaging Technologies - USA. Committed to Global Quality Systems : ISO 9001:2000 Certification for the production facilities of Fibres, Polymers and Preforms ; Committed to Environment, Health and Safety : ISO 14001:1996 for the PET Recycling facilities. $140 Million Sales in Fiscal Year 2006-07 including Exports of $ 71 Million 2. Tulsi Capital Market Limited:- Tulsi Capital Market Limited is a Public Company incorporated on 28 July 1993. It is classified as Indian Non-Government Company and is registered at Registrar of Companies, Bangalore. Its authorized share capital is Rs. 110,000,000 and its paid up capitalisRs.46,575,000. Tulsi Capital Market Limited's Annual General Meeting (AGM) was last held on 30 September 2013 and as per records from Ministry of Corporate Affairs (MCA), its balance sheet was last filed on 31 March 2013. 3. VIJI Finance Limited:- The Leader in Financial Services Viji Finance LTD. brings deep industry experience, innovative service offerings and next generation global delivery to serve the financial services industry. VIJI Finance Ltd. is in the business of providing financial services to its customers engaged in Infrastructural Development and construction, with a focus on Infrastructure, Housing, and Equity, Vehicle Finance sectors in India. Viji Finance Ltd. has played a fundamental role in financing projects, funded through long-term investment instruments. Viji Finance Ltd. also provides customized financial solutions for Major Groups. Viji Finance Ltd. formerly known as Panjon Finance Ltd. is a non-banking company incorporated at 12 October 1994; the name changed of the company was effective from 12 September 2012. The Company's principle activity is to provide
- 40. financial and investmentservices. The Company is mainly doing Finance Business. There is stiff competition among major NBFCs in finance sector, but due to long history and good background, the customers give preference to the Company. It is a Non-Banking Finance Company (NBFC) registered at Reserve Bank of India, Department of Non- Banking Supervision, Bhopal Office. Its Registration Number is B-03.00080. 4. TCI Finance Ltd:- CI Finance was incorporated on November 29, 1973, as a public limited company in the name and style of 'Bhoruka Finance' at Bombay. The name of the company was changed to TCI Finance with effect from November 20, 1992. The Registrar of Companies, Maharashtra, has issued a fresh certificate of incorporation consequent upon the name change on 20th November, 1992.The registered office of the company is located at 1-7- 293, MG Road, Secunderabad, Andhra Pradesh-500003. The company’s principal activity is to provide non-banking financial services. Its products include hire purchase, leasing and inter corporate loans. 5. About Yama Finance Limited: Yama Finance Limited was registered on 25 November, 1993. Yama Finance Limited's Corporate Identification Number (CIN) is L65910DL1993PLC191032, Registeration Number is 191032. Their registered address on file is B-6/5, Local Shopping Centers afdarjung Enclave, New Delhi - 110029, Delhi, India. Yama Finance Limited currently have 3 Active Directors / Partners: Poonam Sharma, Ravi Sharma, Narender Mukharaiya, and there are no other Active Directors / Partners in the company except these 3 officials. Yama Finance Limited is currently in Active Status.
- 41. D. Companies Act,2013:- 1. Name of the regulator with logo: Companies Act, 2013 2. Website: www.companiesact.in 2. Private and Public Company with 5 examples each: Private companies:- With an Annual GDP growth rate of 7-8 percent India is the one of the fastest growing economies in the world. This stable annual GDP growth rate that India is witnessing is mostly due to the rise of the major private sector companies in the country.
- 42. Private sector companiesplay a very important role in the Indian economy. Over the last 15 years or so the major Private companies in India have contributed more than significantly to the growth of the Indian economy. After the liberalization policies in the 1990's India started receiving huge amounts of foreign direct investment (FDI) which was one of the most important reasons behind the success of the private companies in the country. Prior to this the Indian economy was ruled mostly by the public sector enterprises which were known for their strict rules and regulations and bureaucratization. The liberalization policies proved to be a boon for the Indian economy. The economy witnessed huge amounts of foreign funds and along with it came in cutting edge technology and new ideas which started changing the functioning of India business. Slowly and steadily more and more private sector companies started coming up and establishing themselves in this part of the globe. Since the 1990's most of the Foreign Direct Investment that India received was in favor of the private sector. The total amount of investment increased from 56 percent in the first five years of the decade to almost 71 percent in the other five years of 1990. This became the investment trend and is continuing till today. Investments in private sector generally cover sectors like transport, manufacturing, infrastructure, financial services, social services, agriculture, telecommunication and Information technology. However the present investment trends show that sectors like pharmaceutical, contract research semiconductor, biotechnology and product research and development are also gaining immense importance. The Major Private companies of India prioritized customer's need and speedy service, which further fueled competition amongst same industry players. This healthy competition has benefited the end consumers, since the cost of service or products has come down substantially. B grade companies are also offering lucrative and competitively priced products or service, whose quality is at par with 'A' grade companies.
- 43. Over the lastfew years the country has witnessed a sea change in its economy and this is mostly due to some of the finest private sector BPOs, software companies, private banks and financial companies. India's manufacturing sector is also flooded with a number of private Indian companies that dominate the Indian industry and have also made a mark in the global forefront. The manufacturing companies in the country encompass sectors such as chemicals, textiles, petrochemical products, automobile, agri-foods, telecommunication equipment, and computer hardware. 1. Reliance Industries:- Reliance Industries Limited (RIL) is an Indian conglomerate holding company headquartered in Mumbai, Maharashtra, India. The company operates in five major segments: exploration and production, refining and marketing, petrochemicals, retail and telecommunications. The group is present in many business sectors across India including petrochemicals, construction, communications, energy, health care, science and technology, natural resources, retail, textiles, and logistics. RIL is the second-largest publicly traded company in India by market capitalization and is the second largest company in India by revenue after the state-run Indian Oil Corporation The company is ranked No. 99 on the Fortune Global 500 list of the world's biggest corporations, as of 2013. RIL contributes approximately 14% of India's total exports. 2. Tata Consultancy Services Tata Consultancy Services Limited (TCS) is an Indian multinational information technology (IT) service, consulting and business solutions company headquartered in Mumbai, Maharashtra. TCS operates in 46 countries. It is a subsidiary of the Tata Group and is listed on the Bombay Stock Exchange and the National Stock Exchange of India. TCS is the largest Indian company by market capitalization and is the largest India-based IT services company by 2013 revenues. TCS is now placed among the ‘Big 4’ most valuable IT services
- 44. brands worldwide. In2013, TCS is ranked 40th overall in the Forbes World's Most Innovative Companies ranking, making it both the highest-ranked IT services company and the top Indian company. It is the world's 10th largest IT services provider, measured by revenues 3. Bharti Airtel:- Bharti Airtel Limited, commonly known as Airtel, is an Indian multinational telecommunications services company headquartered inNew Delhi, India. It operates in 20 countries across South Asia, Africa, and the Channel Islands. Airtel has a GSM network in all countries in which it operates, providing 2G, 3G and 4G services depending upon the country of operation. Airtel is the world's third largest mobile telecommunications company by subscribers, with over 275 million subscribers across 20 countries as of July 2013.[6] It is the largest cellular service provider in India, with 192.22 million subscribers as of August 2013.[7] Airtel is the Second largest Asia-Pacific mobile operator by subscriber base, behind China Mobile. Airtel is the largest provider of mobile telephony and second largest provider of fixed telephony in India, and is also a provider ofbroadband and subscription television services. It offers its telecom services under the "airtel" brand, and is headed by Sunil Bharti Mittal. Bharti Airtel is the first Indian telecom service provider to achieve Cisco Gold Certification.[8] It also acts as a carrier for national and international long distance communication services. The company has a submarine cable landing station at Chennai, which connects the submarine cable connecting Chennai and Singapore. Bharti Airtel added 5.10 lakh subscribers to take its base to 20.97 crore at the end of July,2014. Its market share in India is highest with a value of 28.41%. Airtel is credited with pioneering the business strategy of outsourcing all of its business operations except marketing, sales and finance and building the 'minutes factory' model of low cost and high volumes. The strategy has since been copied by several operators.[9] Its network—base stations, microwave links, etc.—is maintained by Ericsson and Nokia Siemens Network[10] whereas IT support is provided
- 45. by IBM,[11] andtransmission towers are maintained by another company (Bharti Infratel Ltd. in India).[12] Ericsson agreed for the first time to be paid by the minute for installation and maintenance of their equipment rather than being paid up front, which allowed Airtel to provide low call rates of 1/minute (US$0.02/minute). 4.Wipro:- Wipro Limited (Western India Products Limited[1]) is an Indian multinational IT Consulting and System Integrationservices company headquartered in Bangalore, Karnataka.[4][5] As of March 2014, the company has 146,000 employees servicing over 900 large enterprise & Fortune 1000 corporations with a presence in 61 countries. On 31 March 2014, its market capitalisation was approximately 1.27 trillion ($20.8 billion), making it one of India's largest publicly traded company and seventh largest IT services firm globally. To focus on core IT Business, it demerged its non-IT businesses into a separate company named Wipro Enterprises Limited with effect from 31 March 2013 The demerged company offers consumer care, lighting, healthcare and infrastructure engineering and contributed to approx. 10% of the revenues of Wipro Limited in previous financial yearRecently Wipro has also identified Brazil, Canada & Australia as rapidly growing markets globally and has committed to strengthen the presence in the respective countries over the next 3 years. 5.Infosys:- Infosys Ltd (formerly Infosys Technologies) is an Indian multinational corporation that provides business consulting, information technology, software engineering and outsourcing services. It is headquartered in Bangalore, Karnataka. Infosys is the third-largest India-based IT services company by 2014 revenues,[4] and the fifth largest employer of H-1B visa professionals in the United States in FY 2013.[5] On 31 March 2014, its market capitalisation was 188,510 crores ($31.11 billion), making it India's fifth largest publicly traded company. Its Q2 profit for FY14/15 rose to Rs. 3,096 Crore
- 46. PUBLIC COMPANIES:- 1. HindustanMachine Tools Limited:- HMT Limited, formerly Hindustan Machine Tools Limited, is a state-owned manufacturing company under the Ministry of Heavy Industries and Public Enterprises in India.[1] The company manufactures tractors, watches under its watch division and industrial machines and tools mainly under its Praga division[2] It has a work force of 2,806 with manufacturing units located at Bangalore, Pinjore, Kalamassery, Hyderabad and Ajmer 2. Powergrid Corporation of India Limited :- The Power Grid Corporation of India Limited (POWERGRID), (NSE: POWERGRID, BSE: 532898) is an Indian state-ownedelectric utilities company headquartered in Gurgaon, India. POWERGRID transmits about 50% of the total power generated in India on its transmission network. Its subsidiary company, Power System Operation Corporation Limited (POSOCO) handles power management for Power Grid. POWERGRID also operates a telecom business under the name POWERTEL 3. Bharat Heavy Electricals Limited:- Bharat Heavy Electricals Limited (BHEL) owned by Government of India, is a power plant equipment manufacturer and operates as an engineering and manufacturing company based in New Delhi, India. Established in 1964, BHEL is India's largest engineering and manufacturing company of its kind. The company has been earning profits continuously since 1971-72 and paying dividends uninterruptedly since 1976-77. 4. Oil India Limited:- Oil India Limited (OIL) is the second largest hydrocarbon exploration & production (E&P) Indian public sector company and operational headquarters in Duliajan, Assam, India
- 47. under the administrativecontrol of the Ministry of Petroleum and Natural Gas of the Government of India. However, Company's Corporate office located inNoida in New- Delhi-NCR region. OIL is engaged in the business of exploration, development and production ofcrude oil and natural gas, transportation of crude oil and production of liquid petroleum gas. The story of Oil India Limited (OIL) traces and symbolises the development and growth of the Indian petroleum industry. From the discovery of crude oil in the far east of India at Digboi, Assamin 1889 to its present status as a fully integrated upstream petroleum company, OIL has come far, crossing many milestones. The Company presently produces over 3.6-3.8 MMTPA (million tonnes per annum) of crude oil, over 7 MMSCMD of Natural Gas and over 50,000 Tonnes of LPG annually. Most of this emanates from its traditionally rich oil and gas fields concentrated in the Northeastern part of India and contribute around 80% of total Oil&Gas produced in the region. The search for newer avenues has seen OIL spreading out its operations in onshore / offshore Orissa and Andaman, Cauvery offshore, Tamil Nadu, Arabian Sea, deserts of Rajasthan, onshore Andhra Pradesh, riverbeds ofBrahmaputra and logistically difficult hilly terrains of the Indian state Mizoram and Arunachal Pradesh. In Rajasthan, OIL discovered gas in 1988, heavy oil / bitumen in 1991 and started production of gas in 1996. The company has accumulated over a hundred years of experience in the field of oil and gas production, since the discovery of Digboi oilfield in 1889. It is possibly the only company to do so. From well completion to wellbore servicing, installation, operation and maintenance of modern surface handling facilities, the company has the skill and expertise to manage the entire range of operations required for onshore oil and gas production. The company has over 100,000 square kilometres of license areas for oil and gas exploration. It has emerged as a consistently profitable International company and present in Libya,Gabon, Nigeria, Sudan, Venezuela, Mozambique, Yemen, Iran, Bangladesh and USA. OIL has recently emerged in the offshore giant gas-field project of Mozambique
- 48. and also madediscovery of oil & gas in Gabon as an Operator and Libya as non- operator. OIL acquired Shale oil asset in USA during 2012. In recent years, OIL has stepped up E & P activities significantly in the North-East India. OIL has set up the NEF (North East Frontier) project to intensify its exploration activities in the frontier areas in North East, which are logistically very difficult and geologically complex. Presently, exploration activities are in progress along the Trust Belt areas of Arunachal, Assamincluding Mizoram. The Company operates a crude oil pipeline in the North East for transportation of crude oil produced by both OIL and ONGCL in the region to feed Numaligarh, Guwahati, Bongaigaon and Barauni refineries and a branch line to feed Digboi refinery. 5. Indian Airlines:- Indian, formerly Indian Airlines (Indian Airlines Limited from 1993 and Indian Airlines Corporation from 1953 to 1993) was a major Indian airline based in Delhi and focused primarily on domestic routes, along with several international services to neighbouring countries in Asia. It was state-owned, and was administered by the Ministry of Civil Aviation. It was one of the two flag carriers of India, the other being Air India. The airline officially merged into Air India on 27 February 2011. On 7 December 2005, the airline was rebranded as Indian for advertising purposes as a part of a program to revamp its image in preparation for an initial public offering (IPO).[1] The airline operated closely with Air India, India's national carrier. Alliance Air, a fully owned subsidiary of Indian, was renamed Air India Regional.[2] In 2007, the Government of India announced that Indian would be merged into Air India. As part of the merger process, a new company called the National Aviation Company of India Limited (now called Air India Limited) was established, into which both Air India (along with Air India Express) and Indian (along with Alliance Air) would be
- 49. merged. Once themerger was completed, the airline - called Air India - would continue to be headquartered in Mumbai and would have a fleet of over 130 aircraft. 3. MOA (Memorandum of Association): Memorandum of association is the charter of the company and defines the scope of its activities. An article of association of the company is a document which regulates the internal management of the company. Memorandum of association defines the relation of the company with the rights of the members of the company interest and also establishes the relationship of the company with the members. As per Section 2(56) of the Companies Act,2013 “memorandum” means the memorandum of association of a company as originally framed or as altered from time to time in pursuance of any previous company law or of this Act. Section 4 of the Companies Act,2013 deals with MOA. The Memorandum of a company shall contain the following; 1. Name Clause: The name of the company with the last word “Limited” in the case of a public limited company, or the last words “Private Limited” in the case of a private limited company 2. Situation Clause: The State in which the registered office of the company is to be situated. 3.Object Clause:-
- 50. The objects forwhich the company is proposed to be incorporated and any matter considered necessary in furtherance thereof. 4.Liability Clause: The liability of members of the company, whether limited or unlimited, and also state,— (i) in the case of a company limited by shares- liability of its members is limited to the amount unpaid, if any, on the shares held by them; and (ii) in the case of a company limited by guarantee-the amount up to which each member undertakes to contribute— (A) to the assets of the company in the event of its being wound-up while he is a member or within one year after he ceases to be a member, for payment of the debts and liabilities of the company or of such debts and liabilities as may have been contracted before he ceases to be a member,as the case may be; and (B) to the costs, charges and expenses of winding-up and for adjustment of the rights of the contributories among themselves; 5.Capital Clause: (i) the amount of share capital with which the company is to be registered and the division thereof into shares of a fixed amount and the number of shares which the subscribers to the memorandum agree to subscribe which shall not be less than one share; and (ii) (ii) the number of shares each subscriber to the memorandum intends to take, indicated opposite his name;
- 51. (iii) In thecase of One Person Company, the name of the person who, in the event of death of the subscriber, shall become the member of the company. Identical/undesirable names; The name stated in the memorandum shall not— (a) be identical with or resemble too nearly to the name of an existing company registered under this Act or any previous company law; or (b) be such that its use by the company— (i) will constitute an offence under any law for the time being in force; or (ii) is undesirable in the opinion of the Central Government A company shall not be registered with a name which contains— (a) any word or expression which is likely to give the impression that the company is in any way connected with, or having the patronage of, the Central Government, any State Government, or any local authority, corporation or body constituted by the Central Government or any State Government under any law for the time being in force; or (b) such word or expression, as prescribed in the Companies (Incorporation) Rules, 2014. unless the previous approval of the Central Government has been obtained for the use of any such word or expression. Reservation of name:-
- 52. A person maymake an application in Form No. INC.1 along with the fee as provided in the Companies (Registration offices and fees) Rules, 2014 to the registrar for the reservation of a name set out in the application as- (a) the name of the proposed company; or (b) the name to which the company proposes to change its name The Registrar may, on the basis of information and documents furnished along with the application, reserve the name for a period of sixty days from the date of the application. Penalty: If the company has not been incorporated, the reserved name shall be cancelled and the person making application shall be liable to a penalty which may extend to Rs.1,00,000/- Action: If the company has been incorporated, the Registrar may, after giving the company an opportunity of being heard— either direct the company to change its name within a period of three months, after passing an ordinary resolution; take action for striking off the name of the company from the register of companies; or make a petition for winding up of the company. Form of Memorandum: The memorandum of a company shall be in respective forms as outlined below
- 53. S.NoTable Form 1 Table A MOAof a company limited by shares 2 Table B MOA of a company limited by guarantee and not having share capital 3 Table C MOA of a company limited by guarantee and having share capital 4 Table D MOA of an unlimited company and not having share capital 5 Table E MOA of an unlimited company and having share capital Any provision in the memorandum or articles, in the case of a company limited by guarantee and not having a share capital, purporting to give any person a right to participate in the divisible profits of the company otherwise than as a member, shall be void MOA- CA2013 Vs CA1956:
- 54. S.No CA,2013 CA,1956 1 Itrequires classification of objects as 1. Objects for which the company is proposed to be incorporated and 2. Any other matter considered necessary in furtherance thereof. The objects of the company should be classified in the memorandum as 1. main objects 2. Incidental or ancillary objects 3. Other objects 2 It requires that the memorandum shall state liability of members of the company whether unlimited or limited The unlimited companies were not required to state in the memorandum that liability of the members of the company is unlimited. 3 A company shall not be registered with a name which contains any word or expression which is likely to give the impression that the company is in any way connected with, or having the patronage of, the Central Government, any State Government, or any local authority, There is no such provision
- 55. corporation or body 4 Itincorporates the procedural aspects of application for availability of name of proposed company or proposed new name for existing company There is no such provision 5 It provides that the MOA of a company shall be in respective forms specified in Tables A,B,C,D,E of Schedule I of the 2013 Act as may be applicable to the company. It does not allow the memorandum to be in a form as near to the applicable Forms in Schedule I as the circumstances admit It provides that the MOA of a company shall be in a such one of the forms in Table B,C,D,E of Schedule I of the 1956 Act as may be applicable to the case or in a Form as near thereto as the circumstances admit. 4. Share Capital: 5. Accounts and Audit: The Ministry has taken a big step by notifying 183 major sections of Companies Act, 2013 w.e.f. 01.04.2014 out of which the provisions relating to Audit & Auditors is of utmost importance for all the Chartered professionals out there. This article contains the key amendments bought into effect in relation to audit and auditors and the way forward.
- 56. Chapter X –Audit& auditors ranging from Sections 139 to 148 of the Companies Act, 2013 (the ‘Act’) alongwith Companies (Audit and Auditors) Rules, 2014( the ‘Rules’) have been notified & they shall come into force on the 1st day of April, 2014. Below is the summary of all the sections within the ambit of this Chapter alongwith the corresponding section form Companies Act, 1956: Companies Act, 2013(New Act) Companies Act, 1956(Old Act) Section Title 139 224, 224A, 619 Appointment of Auditors 140 225 Removal, Resignation of auditor and giving of special notice. 141 226 Eligibility, qualifications and disqualifications of auditors. 142 224(8) Remuneration of auditors. 143 227, 228, 263A Powers and duties of auditors and auditing standards. 144 Nil Auditor not to render certain services. 145 229, 230 Auditors to sign audit reports, etc. (similar) 146 231 Auditors to attend general meeting.(similar) 147 232, 233, Punishment for contravention.
- 57. 233A 148 233B CentralGovernment to specify audit of items of cost in respect of certain companies. (Cost Audit) Note: Sub-section 5 & proviso to sub-section 4 of Section 140 of Companies Act, 2013 has not been yet notified & Proviso to sub-section (3) of Section 225 of Companies Act, 1956 still remains in effect. KEY CHANGES : 1) The term of auditor holding the office in a company is increased to 5 years subject to ratification at every AGM as compared to one year in the previous act. 2) Mandatory rotation of auditors in case of listed companies, certain unlisted companies & certain private companies after 5 years. 3) No. of audits per individual/partner reduced to twenty including private limited companies. 4) LLP is eligible to be appointed as an auditor 5) A firm/LLP can partner with non-CA’s and still be appointed as auditor. 6) Automatic re-appointment of retiring auditor in case of other companies where no resolution is passed in AGM 7) Certain services named in Section 144 which an auditor cannot provide to its auditee 8) Compliances in relation to appointment, resignation of auditor have increased and changed significantly. 9) Acts of Relative is included within the ambit of disqualification of an auditor 10) Limits for disqualification in case of holding of security, indebtness to a company or providing guarantee to a company have increased.
- 58. 11) Business relationshipwith a company is bought within the ambit of disqualification of an auditor 12) As per Section 143 (2), an auditor is required to make a report to the members on the accounts examined by him and on every financial statement which are required by or under this Act to be laid in GM report shall after taking into account the provisions of this Act, the accounting and auditing standards and matters which are required to be included in the audit report a. Balance Sheet b. Profit & Loss Account c. Cash Flow Statement d. A statement of changes in equity if applicable e. Other Statements as prescribed Note : CFS is not mandatory in case of One Person Company, Small Company & Dormant Company. Small Company means a company other than public company of which Paid up share capital does not exceed Rs. 50 lakh or such prescribed amount & T/o of which as per its last P & L A/c does not exceed 2 crores or such amount as prescribed. These do not include holding or subsidiary company. 13) As per 143(9) of the company’s act 2013, every auditor shall comply with the auditing standards. 14) Fraud Reporting to CG has been introduced and provisions regarding this are required to be followed by auditor immediately within the specified time. SECTION 139 – Appointment of auditors: 1) Appointment of Auditors other than First: A company shall, at the 1st AGM, appoint an individual or an audit firm (always includes LLP) as an auditor who shall hold office from the conclusion of that meeting till the conclusion of its 6th AGM and thereafter till the conclusion of every 6th AGM.
- 59. Appointment of FirstAuditors: However, the first Auditors of a company are to be appointed always by the BOD within 30 days of registration of company and in case of failure to do so, the members shall be informed who shall within 90 days at an EGM appoint such auditor and such auditor shall hold office till conclusion of 1st AGM. 2) Ratification at every AGM : Company shall place the matter relating to such appointment for ratification by members at every AGM. Note : If the appointment is not ratified, the rules prescribe that the Board of Directors shall appoint another individual or firm as its auditor or auditors after following the procedure laid down in this behalf under the Act. 3) Compliance before appointment by company/auditor: Before the appointment, a company shall obtain from the auditor– a. Written consent of the auditor to such appointment b. Certificate that (a) auditor is eligible for appointment and is not disqualified for appointment under the Act, the Chartered Accountants Act, 1949 and the rules or regulations made there under; (b) the proposed appointment is as per the term provided under the Act; (c) the proposed appointment is within the limits laid down by or under the authority of the Act; (d) the list of proceedings against the auditor or audit firm or any partner of the audit firm pending with respect to professional matters of conduct, as disclosed in the certificate, is true and correct. 4) Compliance after Appointment by Company: A Company shall inform the auditor of his appointment & is to file a notice of appointment with ROC within 15 days of the meeting in which auditor is appointed. (Form No. ADT – 1)
- 60. Note : Earlierauditor used to file Form 23B and inform ROC, now the company is to inform ROC, so in a way they shifted the burden to inform on Company. 5) Mandatory Rotation of Auditors in case of Listed Companies & Certain classes of Companies : All Listed companies and Companies prescribed by CG shall not appoint or re-appoint– o an individual – for more than one term of 5 consecutive years o an audit firm – for more than two terms of 5 consecutive years Classes of Company prescribed by CG under the Rules : (a) all unlisted public companies having paid up share capital of rupees ten crore or more; (b) all private limited companies having paid up share capital of rupees twenty croreor more; (c) all companies having paid up share capital of below threshold limit mentioned in (a) & (b) above, but having public borrowings from financial institutions, banks or public deposits of rupees fifty crores or more. Cooling Period: An individual or audit firm as the case may be who/which has completed the abovementioned terms shall not be eligible for re-appointment as auditor in the same company for 5 years from the completion of such term Common Partners Restriction: As on the date of appointment, no audit firm having a common partner/s to the other audit firm, whose tenure has expired in a company immediately preceding the F.Y., shall be appointed as auditor of the same company for a period of 5 years. Transition Period : Every company required to comply as above, existing on or before the commencement of this Act, shall comply with the above requirements within 3 years from 01.04.2014. Rights of shareholders/ auditor unharmed : Nothing contained above with respect to rotation shall prejudice the right of the company to remove an auditor or the right of the auditor to resign from such office of the company. Provisions in Rules regarding rotation :
- 61. - The periodfor which the individual/firm has held office as auditor prior to the commencement of the Act shall be taken into account for calculating the period of 5 or 10 years, as the case may be. - The incoming auditor/audit firm shall not be eligible if such auditor/audit firm is associated with the outgoing auditor/audit firm under the same network of audit firms. Here, “same network” includes the firms operating or functioning, hitherto or in future, under the same brand name, trade name or common control. For the purpose of rotation of auditors,- (a) a break in the term for a continuous period of five years shall be considered as fulfilling the requirement of rotation; (b) if a partner, who is in charge of an audit firm and also certifies the financial statements of the company, retires from the said firm and joins another firm of chartered accountants, such other firm shall also be ineligible to be appointed for a period of five years. Illustration explaining rotation in case of audit firm : Number of consecutive years for which an audit firm has been functioning as auditor in the same company [in the first AGM held after the commencement of provisions of section 139(2)] Maximum number of consecutive years for which the firm may be appointed in the same company (including transitional period) Aggregate period which the firm would complete in the same company in view of column I and II I II III 10 years (or more than 10 years) 3 years 13 years or more
- 62. 9 years 3years 12 years 8 years 3 years 11 years 7 years 3 years 10 years 6 years 4 years 10 years And so on 6) Reappointment in case of other than listed companies possible: A retiring auditor is eligible for reappointment at an AGM, if a) He is not disqualified for re-appointment b) He has not given notice in writing of unwillingness to be re-appointed c) SR passed at a meeting that some other auditor is to be appointed or expressly providing that he shall not be re-appointed (Read special notice requirement in Section 140) Where at any AGM, no auditor is appointed or re-appointed, the existing auditor shall continue to be the auditor of the company. 7) Additional rights provided to Shareholders : Subject to the provisions of this Act, members of a company may resolve to provide that - o In the audit firm appointed by it, the auditing partner and his team shall be rotated at such intervals as may be resolved by members; or o The audit shall be conducted by more than one auditor. 8) Casual Vacancy (CV): o CV caused because of resignation : By BOD within 30 days but the same should be approved by the company within 3 months of recommendation and shall hold office till conclusion of next AGM o CV caused because of other reasons (disqualifications as per 141) : By BOD within 30 days, No approval
- 63. 9) Where acompany is required to constitute an Audit Committee u/s 177, all appointments, including the filling of a CV of an auditor shall be made after taking into account the recommendations of such committee. Section 140 : Removal, Resignation of auditor and giving of special notice o The auditor appointed u/s 139 may be removed from his office before the expiry of his term only by way previous approval of CG and a special resolution of the company to be passed in a general meeting within 60 days of receipt of approval of CG. However, before such step, the auditor shall be given a reasonable opportunity of being heard. Theapplication to CG has to be made within 30 days of passing the board resolution.(Form No. ADT- 2 along with fees). Here, a long-term relationship is built for 5 years, since removal before 5 years would be considered as removal before the expiry of his term. And for removal before the expiry of an auditor’s term requires strict formalities to be followed. o Compliance by auditor after resignation : The auditor who has resigned from the company shall file within a period of 30 days from the date of resignation, a statement in the prescribed form with the company and the ROC, indicating the reasons and other facts as may be relevant. (Form No. ADT-3) Punishment if auditor doesn’t comply : Fine of Rs. 50,000 to Rs. 5,00,000 o Special Notice : Special notice shall be required for a resolution at an annual general meeting appointing as auditor a person other than a retiring auditor, or providing expressly that a retiring auditor shall not be re-appointed, except in case of mandatory rotation in case of listed companies. Other provisions w.r.t special notice are similar to the old Act. Section 141 : Eligibility, Qualifications & Disqualifications Eligibility: a) Individual : Only if is a CA holding certificate of Practice as per Section 2(17) of the Companies Act,2013. b) Audit Firm/LLP : Majority of partners who are CA are practicing in India, apptd in Firm name. Only the partner’s who are CA’s are authorised to act as auditors and sign.
- 64. Note : Thus,it seems Firm/LLP can contain partner’s who are Non-CA’s. The introduction of LLP as an auditor and ability of a firm/LLP to operate with partners who are not Chartered Accountants is a welcome change and in line with international practices. This will also result in multi-disciplinary firms providing vide range of services. Disqualifications : The following persons shall not be eligible for appointment as auditors of a company or shall vacate the office after appointment :— Disqualifications similar to old act : (a) a body corporate other than a LLP (b) an officer or employee of the company; (c) a person who is a partner, or who is in the employment, of an officer or employee of the company; Disqualifications amended and its limits : (d) a person who, or his relative or partner— (i) is holding any security of or interest in the company or its subsidiary, or of itsholding or associate company or a subsidiary of such holding company: Provided that the relative may hold security or interest in the company of face value not exceeding 1000 rupees or such sum as may be prescribed; (Prescribed sum is Rs. 1 lakh) (ii) is indebted to the company, or its subsidiary, or its holding or associate company or a subsidiary of such holding company, in excess of such amount as may be prescribed; (Prescribed sum is Rs. 5 lakh) (iii) has given a guarantee or provided any security in connection with the indebtedness of any third person to the company, or its subsidiary, or its holding or associate company or a subsidiary of such holding company, for such amount as may be prescribed;(Prescribed sum is Rs. 1 lakh) NEWLY ADDED disqualifications provided in the ACT: (e) a person or a firm who, whether directly or indirectly, has business relationshipwith the company, or its subsidiary, or its holding or associate company or subsidiary of such holding company or associate company of such nature as may be prescribed;
- 65. The rules definethe “business relationship” as any transaction entered into for a commercial purpose, except – (i) commercial transactions which are in the nature of professional services permitted to be rendered by an auditor or audit firm underthe Act and the Chartered Accountants Act, 1949 and the rules or the regulations made under those Acts; (ii) commercial transactions which are in the ordinary course of business of the company at arm’s length price – like sale of products or services to the auditor, as customer, in the ordinary course of business, by companies engaged in the business of telecommunications, airlines, hospitals, hotels and such other similar businesses. (f) a person whose relative is a director or is in the employment of the company as adirector or key managerial personnel; (g) a person who is in full time employment elsewhere or a person or a partner of a firm holding appointment as its auditor, if such persons orpartner is at the date of such appointment or reappointment holding appointment as auditor of more than 20 companies; (h) a person who has been convicted by a court of an offence involving fraud and a period of ten years has not elapsed from the date of such conviction; (i) any person whose subsidiary or associate company or any other form of entity, isengaged as on the date of appointment in consulting and specialised servicesas providedin section 144. Note : BUSINESS RELATIONSHIP IS AN INCLUSIVE TERM WHICH IS OPEN TO VIDE INTERPRETRATIONS THOUGH THE EXCEPTIONS ARE PROVIDED BUT THE EXCEPTIONS ARE LIMTED TO CERTAIN COMMERICAL TRANSACTION OF CERTAIN INDUSTRIES LIMITS FOR AN INDIVIDUAL/PARTNER REDUCED TO TWENTY : The 1956 Act and the Institute of Chartered Accountants of India (‘ICAI’) restrict the number of companies in which a person/ firm can be appointed as auditor. An individual cannot be appointed as auditor for more than 30 companies. Further, an individual cannot be appointed
- 66. as auditor formore than 20 public companies and of which not more than 10 companies should have a paid up share capital of more than Rs 25 lakh. In case of a firm, such ceiling is determined for every partner of the firm. This limits specifically excluded private companies. However, the ICAI had notified that an auditor could accept 30 audits including private companies. But the Companies Act, 2013 simply restricts the number of audits to 20 companies for an individual/ partner. It does not provide any restrictions based on nature/ size of the companies. Thus, this limit is further reduced. Note : For the audits taken up by auditor for F.Y. 2013-14, the limits won’t be applicable since the appointment for the same was made before 01.04.2014. Section 144 – New Insertion : AUDITOR NOT TO RENDER CERTAIN SERVICES : In Old Act, there was no provision as to rendering of non-audit services to an audit client. It was determined by applying the Code of Ethics and the Guidance Note on Independence of Auditors issued by the ICAI. But the New Act contains specific provisions that prohibit auditors of a company to render non-audit services to an audit client directly or indirectly or its holding company or subsidiary company. Prohibited services include: • Accounting and book keeping services; • Internal audit; • Design and implementation of any financial information system; • Actuarial services; • Investment advisory services; • Investment banking services; • rendering of outsourced financial services; and • Management services.
- 67. Here, the Acthas provided a transition period 1 year meaning an auditor who has already been performing any non-audit services shall comply with this section till 31.03.2015. Directly or Indirectly Defined : Auditor – Individual : His Relative, Any other person connected/associated with such individual, entity in which such individual has significant influence or control or whose name/trademark/brand is used by such individual. Auditor – Audit Firm : All partners, parent/subsidiary/Associate Entity or entity in which firm/partner has significant influence or whose name/trademark/brand is used by such firm/partners. Comments : This section will significantly damage the ability of an audit-firm/individual to provide most non- audit services. The requirements appear to be quite onerous and indeed would appear to prohibit an audit firm from providing a wide range of services, even when those are non- material. Section 142 : Remuneration of auditors First Auditor : Board Other : GM As per the old Act, any sums paid by the company in respect of the auditors’ expensesshall be deemed to be included in the expression “remuneration”. But as per the new act, the remuneration in addition to the fee payable to an auditor, include the expenses, if any, incurred by the auditor in connection with the audit of the company and any facility extended to him but does not include any remuneration paid to him for any other service rendered by him at the request of the company. This means, the board is free to decide the remuneration for other services provided by auditor provided they don’t come within Section 144. Section 147 : Penalty Penalty w.r.t to contravention of Section 139 to 146 : Company : Rs. 25,000 to Rs. 5,00,000
- 68. Officer in Default: Rs. 10,000 to Rs. 1,00,000 or imprisonment upto 1 year or both Auditor (Sec 139, 143, 144, 145) : Rs.25000 to Rs. 5,00,000 6. Winding up: A company is a juristic person that comes into existence by way of incorporation and can be dissolved by undertaking a winding-up process as per the provisions of the Companies Act, 2013 (“New Act”). The winding up process is the last stage in the life of a company, wherein its existence is dissolved and all its assets are used to satisfy the creditors and shareholders. Reasons for Winding Up The reasons for compulsory winding up under the Companies Act, 1956 (Old Act) and the New Act remain same, except that the following grounds stand deleted as reasons for compulsory winding up under the New Act: a. Suspension of the business for one year from the date of incorporation or suspension of business for a whole year; or b. Reduction in number of members of a company below two (in case of a private company) and seven (in case of a public company). However, a new ground has been added for compulsory winding up under the New Act. On the application by the Registrar or any other person authorised by the Central Government by way of notification under the New Act, if the Tribunal is of the opinion that the affairs of the company have been carried out in a fraudulent manner or
- 69. unlawful purpose orany person concerned or involved in the management or affairs of the company has acted in a fraudulent manner or misfeasance or misconduct, that it is better to wind up the company. Winding Up Process Chapter XX, Part-I of the New Act deals with the compulsory winding up process. The petition for compulsory winding up can be presented to the appropriate authority by: a. The company; or b. The creditors (contingent/ prospective creditors1/creditors); or c. Any contributory or contributories; or d. All or any person specified in (a) (b) (c) together; or e. By the Central or the State government2; or f. By the Registrar or any person authorised by the Central government for that purpose. Filing of Winding up Petition The draft rules provide that a winding up petition (‘Petition’) is to be filed under section 272 of the New Act in the prescribed form no 1, 2 or 3, whichever is applicable and is to be submitted in three sets. Statement of Affairs of the Company If the company files the Petition, it shall be accompanied with the statement of affairs (‘Statement’) in Form No. 4 read with section 272(5) of the New Act. The Petition shall state the facts up to a specific date, which shall not be the date more than fifteen days prior to the date of making of the Statement. A Chartered Accountant in practice shall
- 70. duly certify thisStatement. The fee for filing the Petition shall be submitted as prescribed in Annexure-B of the draft rules. Advertisement of the Petition Subject to the directions of the Tribunal, the petition shall be advertised in not less than fourteen days before the date fixed for hearing in one daily newspaper in English language and one daily newspaper in the principal regional language circulating in the State or union territory where the registered office of company is situated. The advertisement needs to be carried out in Form No 6. The previous requirement of publication in the official gazette of the State or union territory mentioned in Company Court Rules (1959), has been done away with under the New Act. Final Order and its Content The Tribunal after hearing the Petition has the power to dismiss it, with or without cost, or to make an interim order, as it thinks fit, or can appoint the provisional liquidator of the company till the passing of the winding up order. An order for winding up of a company will be in Form 11 and contains the footnote prescribing the following duties: a. To submit the complete and audited book of accounts up to the date of order; b. To attend the company liquidator at the required time and place with all information; c. To surrender the assets3 of the company and documents related to it, including those documents from which the benefit from the assets accrues. Winding up or liquidation is not a legal exercise only to satisfy the debts of creditors, but also signifies loss of brand value that the company enjoyed in its entire history. There is not much of a difference in the manner in which the two legislations deal with the process of liquidation, except that the New Act has somewhat simplified the process.
- 71. The draft rulespertaining to the winding up of a company are yet to be released by the Ministry of Corporate Affairs. Winding-up of every company is food for thought to others in the field to understand what went wrong in governing a company. F. MFIs and Cooperatives Micro-Finance Institutions and cooperatives:- 1.Regulatory framework of MFIs and cooperatives:- A) Highlights of the Legal Structure and Judicial System. Except for susu collectors, susu clubs, ROSCAs and ASCAs, MFIs in Ghana are required to establish legal entity. Banks and NBFIs (which include rural banks and S&L companies) are required to be incorporated entities under the Companies Act. Credit unions have legal status and identity through registration under the Cooperative Societies Act as well as the requirements of the NBFI Law. NGOs, including those with microcredit orientation, have legal status through establishment under the provisions of the Law on Trusts and Charitable Institutions and the required registration with the Ministry of Employment and Social Welfare. B) Ghana’s legal structure and judicial systemneeds to be further modernized and upgraded (i) to facilitate creation/registration/execution of lender’s security interests on pledged collateral, (ii) eliminate duplicate/multiple pledging of collateral, and (iii) facilitate introduction of securitized financial instruments that can benefit microfinance development through better connection and linkages to formal sector institutions and financial markets. These modernizing improvements will be beneficial not just to the development of sustainable microfinance, but
- 72. for the formalfinancial sector as well. As the experience of other countries (e.g., Romania) has demonstrated, reforming the legal and regulatory frameworks for financial transactions secured with movable assets has a substantial favorable impact on expanding access to markets for rural credit and microfinance.10 For Ghana, such reforms would need to be accompanied by a significant reduction in government programs that can crowd out sustainable microfinance by private sector institutions. C) Highlights of the Regulatory Framework. In Ghana, a tiered structure of institutions and graduated regulation for microfinance existed even before the Government gave formal recognition to microfinance in 1999 and through new BOG regulations pertaining specifically to microfinance. 11 The newly-adopted formal policies on microfinance and the adoption of a regulatory framework specific to microfinance activities had parallel co-existence with an existing credit-quota system for agricultural credit and SME finance. The regulatory (and tax) preferences enjoyed by rural banks and credit unions in combination with the operation of a graduated/tiered systemhave made it possible for NGO MFIs to transform into licensed institutions. This has been an indispensable element for substantially expanding the ability of MFIs to mobilize financial resources beyond traditional grants and donations. D) However, the remaining traditions of the former credit quota system can be detrimental to microfinance, and further policy clarification on this aspect is indispensable. The BOG continues to coordinate closely with GHAMFIN and with the Ghana Credit Union Association (CUA) to develop regulatory standards that can help promote institutional growth of the microfinance industry, and is seriously considering ways to simplify prudential standards/guidelines. A further development that bears watching is the establishment of a Government-sponsored and supported apex institution for rural banks. The experience elsewhere has shown that government-promoted apex organizations pose a significant risk of distorting the allocation of scarce financial resources and competing unfairly against private MFIs because of access to subsidized resources, thereby retarding the development of truly sustainable microfinance.
- 73. E) However, theremaining traditions of the former credit quota system can be detrimental to microfinance, and further policy clarification on this aspect is indispensable. The BOG continues to coordinate closely with GHAMFIN and with the Ghana Credit Union Association (CUA) to develop regulatory standards that can help promote institutional growth of the microfinance industry, and is seriously considering ways to simplify prudential standards/guidelines. A further development that bears watching is the establishment of a Government-sponsored and supported apex institution for rural banks. The experience elsewhere has shown that government-promoted apex organizations pose a significant risk of distorting the allocation of scarce financial resources and competing unfairly against private MFIs because of access to subsidized resources, thereby retarding the development of truly sustainable microfinance. 2. All about MFIs:- Microfinance institutions, or MFIs, come in all shapes and sizes. They can differ in scale, experience, legal statute, strategy and budget. What lies at the heart of the microfinance system is the issue of reliability. Reliability determines how smoothly an MFI operates. First of all, microcredit cannot exist without microfinance institutions. These organizations provide hard-to-find financial services to local individuals and groups. MFIs aimto promote economic activity among low-income earners, for whom access to official banking services is impossible or nearly so. An MFI's reach can vary tremendously. One institution could serve a hundred clients while another MFI, such as Grameen Bank or BRAC, could serve six million. MFIs are organized in such a way that they provide quality viable long-term services. Generally speaking, an MFI is made up of a head office and a number of credit agencies. The agencies are located in different parts of the region in question. Their credit agents carefully select each and every client and take charge of loan approvals, loan reimbursements, savings management, and other services. As they understand how to create economic activity, they act as business advisors and provide precious counsel to borrowers.
- 74. An MFI canfall into different legal categories depending on the country in which the institution is based. An MFI could be an NGO, a credit cooperative or a non-bank financial institution; its particular statute would dictate what kind of funding it receives. An NGO is not allowed to accept borrowers' savings and must be financially supported by various subsidies and bank loans. Meanwhile, a credit cooperative relies heavily on client savings. As for the non-bank financial institution, this organization may take some savings deposits but it is mostly financed by shareholders. An MFI is characterized as having dual objectives—they are both social and financial. The former aim means that the MFI contributes to development and fights against poverty. The latter objective stresses that the MFI must remain profitable enough to continue operating1. This balance is not always easy to achieve. Each MFI's strategy, whether it is more community- centered or more economic, will determine operating decisions. The viability of a microfinance institution is based on several factors: compatibility with the environment, strong on-field knowledge, clear governance, and financial health. In terms of financial stability, an MFI must be in no hurry. A promising MFI needs to make it through an average of five years before finding a steady working rhythm. This could take even longer in a rural environment with a low-density population. To be sustainable, an MFI must keep a balanced budget, all while growing to meet the needs of an expanding clientele. Which MFIs can be counted on? Anne-Sophie Perrachon, Operations Director at Microworld, says, "We use clear and objective criteria: solid financial history, good performance in terms of social benefits, and transparency." Although these demands seem simple, few MFIs actually meet these expectations2. As microfinance continues its rigorous development, the number of trustworthy microfinance institutions will, and must, go on the rise. 1 Le guide de la microfinance. Microcrédit et épargne pour le development. 2 A growing number of MFIs around the world are sharing their financial information and other
- 75. performance-related data tointernational organizations. The largest databank can be found at MIX atwww.mixmarket.org vii. Financial Inclusion:- Financial inclusion or inclusive financing is the delivery of financial services at affordable costs to sections of disadvantaged and low-income segments of society, in contrast to financial exclusion where those services are not available or affordable. An estimated 2.5 billion working-age adults globally have no access to the types of formal financial services delivered by regulated financial institutions. For example in Sub-Saharan Africa only 24% of adults have a bank account even though Africa's formal financial sector has grown in recent years.[1] It is argued that as banking services are in the nature of public good; the availability of banking and payment services to the entire population without discrimination is the prime objective of financial inclusion public policy. Goals of Financial inclusion:- The term "financial inclusion" has gained importance since the early 2000s, a result of findings about financial exclusion and its direct correlation to poverty. The United Nations defines the goals[2] of financial inclusion as follows: access at a reasonable cost for all households to a full range of financial services, including savings or deposit services, payment and transfer services, credit and insurance; sound and safe institutions governed by clear regulation and industry performance standards; financial and institutional sustainability, to ensure continuity and certainty of investment; and competition to ensure choice and affordability for clients.
- 76. Former United NationsSecretary-General Kofi Annan, on 29 December 2003, said: ”The stark reality is that most poor people in the world still lack access to sustainable financial services, whether it is savings, credit or insurance. The great challenge before us is to address the constraints that exclude people from full participation in the financial sector. Together, we can and must build inclusive financial sectors that help people improve their lives.” More recently, Alliance for Financial Inclusion (AFI) Executive Director Alfred Hannig highlighted on 24 April 2013 progress in financial inclusion during the IMF-World Bank 2013 Spring Meetings: "Financial inclusion is no longer a fringe subject. It is now recognized as an important part of the mainstream thinking on economic development based on country leadership 3. Detail report on any 5 MFIs in India:- 1. BASIX-Bhartiya SamruddhiFinance Limited (BSFL):- Bhartiya Samruddhi Finance Limited (BSFL)1 is a flagship company of Hyderabad-based BASIX Group of institutions established in 1996. BSFL, founded as a Non-Banking Finance Company (NBFC), facilitates financial inclusion of low-income and poor groups by offering reasonable lines of credit along with savings facilities based on the principles of operational efficiency, financial viability and sustainable social value. Although begun on a credit-based approach to financial inclusion, BSFL shifted its operational paradigm to that of livelihood facilitator to meet more effectively the needs of its customers. In its current strategy, operational since 2003, BSFL offers livelihood related products and services through the strategic concept of ‘Livelihood Triad’ that comprises livelihood financial services (credit, savings, and insurance), agricultural and business development services and institutional development services for low-income and poor groups in rural and urban areas across multiple sectors of the economy. In its service verticals, BSFL lays stress upon leveraging new technologies and uses innovative risk mitigation products, such as insurance products, catering to the vulnerabilities of its customers and their
- 77. economic budgets. Oneof its key areas of expertise, acquired from a portfolio of innovations built over 14 years, lies in its practice of strategic interventions to enhance the economic productivity and to reduce costs for its customers engaged in various subsectors of the economy. innovative risk mitigation products, such as insurance products, catering to the vulnerabilities of its customers and their economic budgets. One of its key areas of expertise, acquired from a portfolio of innovations built over 14 years, lies in its practice of strategic interventions to enhance the economic productivity and to reduce costs for its customers engaged in various subsectors of the economy. Its future strategy and growth lies in expanding its presence across rural and urban spaces. At present, BSFL has a customer base of approximately one million with 90% concentrated in rural areas and it plans to expand its base to 10 million by 2014 covering both urban and rural areas 2. Grama Vidiyal:- Grama Vidiyal is a microfinance institution, operating in the Tamil Nadu area of South India. Since 1993, Grama Vidiyal, in partnership with Activists for Social Alternatives (ASA), has provided small loans to women without access to formal credit and who typically have daily incomes of less than INR 80 (USD 2) per day. Grama Vidiyal’s loans outstanding currently exceed Rs.1.157 billion (USD 28.93 million) among its 263,002 women members. Grama Vidiyal is ranked the #4 Microfinance institution in the developing world and the leading microfinance institution in India in the "2007 MIX Global 100 : Rankings of Microfinance Institutions - Composite Ranking". Grama Vidiyal’s parent organisation, Activists for Social Alternatives (ASA) is a public charitable trust founded in 1986 by S. Devaraj, the Chairman and Managing Director. ASA initially concentrated in working with the exploited and deprived to motivate them through education, training, networking, and advocacy. Grama Vidiyal was originally established in 1993 as the microfinance branch of ASA. In April 1997, Grama Vidiyal officially came into existence when it registered as a separate charitable trust distinct from ASA.
- 78. In 2007, GramaVidiyal transformed from a charitable trust to a regulated Non-Bank Financial Company (NBFC). Its status as an NBFC brings Grama Vidiyal under the purview of government regulation but will permit the firm to take on larger amounts of equity capital. Grama Vidiyal expects continued rapid growth, reaching more than two million clients by expanding to other states of India with an excess of Rs.15 billion (USD 400,000,000) in loans outstanding by 2012 3. Sanghamithra Rural Financial Services:- Sanghamithra Rural Financial Services (SRFS) is a Section 25 Not for Profit company based in Bangalore. It was established in 1995, but became fully operational from February 2000. The company was promoted by MYRADA (Mysore Rehabilitation and Development Agency), a leading NGO in Karnataka with the core objective of reaching out to the unreached poor where the poor cannot access credit from formal financial institutions at affordable rate of interest and at right time. August 31 2012, SRFS had 1.2 lakh active members across 22 districts of Karnataka, Tamil Nadu, Andhra Pradesh (AP) and Maharashtra. As in August 2012, about 75% of the portfolio was in Karnataka, 24.6% in Tamil Nadu and remaining in districts of AP and Maharashtra. Significant share of SRFS’s entire portfolio comprises of the SHG loan product extended for income generating purposes to poor women (their other product, Housing loan product and water & sanitation loans constitute a small share in the portfolio). The company’s 30+ delinquency level for the overall portfolio of SRFS was 2.06% as on August 31, 2012. As mentioned, SRFS is a not for profit organization, which was started with funds from MYRADA. Being a section 25 company, the company need not have any equity on its books. Post its commencement of operations, they have received funds and grants from many individuals and entities focused on social development.In the first six months of the current financial year, SRFS reported a provisional net profit of Rs. 1.6 crore on a provisional total income of Rs. 8.8 crore. During 2011-12, the company reported a net profit of Rs. 1.5 crore on a total income of Rs. 14.8 crore. ICRA has reaffirmed the [ICRA]BB (pronounced ICRA double B) rating to the Rs. 100.00 crore long term bank loans of Sanghamithra Rural Financial Services (SRFS or the Company)†. The outlook on the long term rating is stable. The rating continues to factor in SRFS’s currently
- 79. moderate scale ofoperations, geographically concentrated portfolio and, limited ability to raise funds owing to its size and nature (being a section 25 company). The company’s microfinance activities continue to be regionally concentrated notwithstanding the initiatives taken to diversify, which exposes the company to competitive and political risks. The microfinance loans extended by the company are unsecured in nature and are largely to customers with an average credit profile. This coupled with SRFS’s significant reliance on outsourced group formation for disbursements and, limited loan monitoring post disbursements exposes the company to considerable credit risks. The rating takes cognisance of the initiatives taken by the company for improving its internal systems and controls, including branch connectivity, monitoring and audit processes in the recent past, however the same is still evolving in nature and the benefits of the above are expected to accrue going forward. The rating however takes note of the strong potential in the microfinance business in India going forward, SRFS’s track record in microfinance business and its established franchise in Karnataka. The company has been able secure grants and, funds at reasonable rates in the past; however SRFS has limited fund sources in comparison to other microfinance companies for growth going forward. ICRA takes note of the conservative business growth model of the company in the past. Considering the company’s plan to have a conservative growth model going forward also, ICRA expects SRFS to maintain a favourable liquidity profile. SRFS’s gearing stood at 5.2 times as on September 30, 2012 (6.1 as on March 31, 2012). SRFS’s 90+ delinquency rate‡of 1.55% as on March 31, 2012, witnessed an improvement over 3.00% as on December 31, 2011, supported to an extent by write-offs. The asset quality of the company however moderately deteriorated in the current year to 90+ delinquency rate being at 1.76% in August 2012. The company’s favourable cost of funds, low cost of operations and exemption from income tax (a section 25 company) supports its overall profitability indicators. SFRS’s profitability in 2011-12 was impacted by a part provision made (Rs 0.40 crore) towards a service tax demand and in the reduction in the spread on account of an increase in the cost of funds. ICRA takes note of the incremental contingent liability of about Rs. 3.3 crore towards the service tax demand on its books. 4. Village Financial Services:-
- 80. a. In 1978,West Bengal was affected by a devastating flood. Group of concerned youths pledged to help the disadvantaged people in society. In 1982 Village Welfare Society (VWS) registered as a grant based not–for-profit organization. In 1996, VWS starts microfinance activities. b. This led to the setting up of “Village Micro Credit Services”, a Section 25 not-for- profit company established to undertake the microfinance activities in 2004. c. Village Micro Credit Services chose to work specifically on the issue of micro-finance as it is recognized world over as the ideal approach to address the issue of all round development of society – economic, social, political and cultural. d. The need to transform into a Non-Banking Financial Company (NBFC) entity was highly felt. e. The group finally acquired a Kolkata based existing NBFC called Spencer Vinimay Pvt Ltd The acquisition took place on January, 2006. f. In due course of time, the NBFC was renamed as “Village Financial Services Private Limited “(VFSPL), is a non deposit taking NBFC, regulated by RBI is engaged in microfinance activities. The company was reclassified by the RBI as “NBFC-MFI” on 27/09/2013. Village Financial Services Private Limited (V.F.S) is the 1st Micro Finance Company in Eastern Region with Non Banking Financial Company status (N.B.F.C) registered by Reserve Bank of India (RBI). We are the 1st ISO certified Micro Finance Company in India. Village Financial Services Private Limited has started Micro Finance Operations in the financial year 2005-2006. Micro Finance program of V.F.S has grown & has touched the lives of many thousands of poor families by providing them credit for income generating activities & helping them to become economically self sufficient, sensitizing women about empowerment issues and bringing about a qualitative change in them and their families related to standard of living & their own status in the society. Products:-
- 81. General Criteria: Onlywomen borrowers are eligible The member must be a member of a JLG The loan will be used for any Income Generating Activity only Household Annual income of the borrower should not exceed Rs. 60,000/- in rural area and it should not exceed Rs. 1,20,000/- in non-rural area Loan should not exceed Rs. 35,000/- in the first cycle Total indebtedness of the borrower should not exceed Rs. 50,000/- Other terms and conditions will be applicable as per RBI regulations & guidelines Name of Product Briddhi Loan Samriddhi Loan Clientele (group, individual) JLG group JLG group Purpose Income generating activities Income generating activities Age limit 18-55 years 18-55 years Loan Size Rs. 4,000/- to Rs. 15,000/- Rs. 16,000/- to Rs. 50,000/- (multiple of Rs. 2,000/-) Loan tenure 12 months 24 onths 5. Community Development Centre:- CDC is a not for Profit Social Service Organization established in 1994. It was duly registered as a Trust under the Indian Trust Act of 1882. CDC has its registered office on the Periyakulam- Batlagundu Main Road nearGhat Road at Genguvarpatti Village. Being aware of the fact that
- 82. the development ofWomen is the development of the family and at large the development of the community, Programmes are planned and implemented for the economical development of rural women. Development Programmes are decided by the Programme Planning Team at the Head Office on the basis of village level survey taken by the staff of CDC.The basic unit for the implementation of development programmes is the Self Help Group(SHG). Over the years many such programmes were taken up and these have caused sustainable development among the poor rural women of our programme area. Vision: Enabling the rural poor to become self-reliant, skillful and resourceful and thereby making their economic development sustainable. Mission: Leading rural people, particularly women towards economic development by empowering them and thereby encouraging their participation in the Nation Building Process. Objectives: To Build Awareness and motivational Initiatives regarding Women rights. To Emphasis and develop the knowledge and skills of the marginalized people particularly women. To ensure the livelihood of deprived community through the right based approach. To improve the health status of the disadvantaged.
- 83. To createan environment for children towards their over all development. To carry out advocacy and lobbying. To take initiative for networking with like-minded organizations. To provide financial assistance to rural women at their door steps. To work for the betterment of the poor women to enable them achieve equal rights in the society. To develop ways and means to increase their income through skill building, Entrepreneurship development programmes etc., About CDC CDC is a Non-Government Organization with no religious or political affiliation. It was started by Mr. P.Pandian in 1994 with an ambitious plan to improve the economic and social status of rural women in Periyakulam Block of the present Theni district. Since then the activities, scope and geographical coverage of the organization have grown. CDC is a testimony of growing confidence and acceptance of its services among its beneficiaries(all women) since 1994. The organization has been registered U/S 12A of the Indian Income Tax Act and has been granted exemption certificates under Section 80G of the Income Tax Act 1961. We have been permitted to accept foreign contributions by the Department of Home Affairs, Government of India. Our FCRA number being 075940363. The founder Mr. P. Pandian with his concern for the fellowbeings and passion to serve for the development of the underpriviledged established CDC in 1994 in order to bring hope and positive changes in their lives through his efforts. His wife Mrs.P.OlivaRani who was then in
- 84. Government Service resignedher job and joined him. Their association with eminent persons such as Dr. G.Pankajam who later became the Vice-Chancellor of Gandhigram Rural University prompted them to register the organization as a Social Service organization and became operational. CDC was registered as a Voluntary Public Charitable Trust on 23-3-1994 under Indian Trust Act 1882 and its registration number being 318/94. The organization has been registered U/S 12A of the Indian Income Tax Act and has been granted exemption certificates under Section 80G of the Income Tax Act 1961. We have been permitted to accept foreign contributions by the Department of Home Affairs, Government of India. Our FCRA number being 075940363. Encouraged by the positive results of their activities at grass-root level Community Development Centre began building what we today refer to as CDC. CDC inspires possibilities, creates opportunities and builds connections through community. Our work connects people with one another, provides access to resources many could not afford on their own, offers training and learning opportunities including technical assistance. Profile of Trustees Mrs.P.OlivaRani - Managing Trustee Mrs.P.OlivaRani is a graduate in Science from Madurai Kamaraj University and also has secured graduation in Education.She was associated with TamilNadu Integrated Nutrition Project (TINP) and has vast Experience in Rural Development by associating with ASSEFA, for more than one decade, in Education Projects.
- 85. Mr.P.Pandian, - Founder andTrustee Mr.P.Pandian is a post graduate in Political Science from the Madurai Kamaraj University. He has also specialized in Rural Science and Community Development from Gandhigram Rural University. He was associating with various development organizations such as ASSEFA, IRDT and Peace Trust for more than two decades. By virtue of his association withthese NGOs, He has a good working knowledge of planning and implementation of development Programmes. Mr.M.Jesudasan, - Trustee Mr.M.Jesudasan is the Former Regional Director, Reserve Bank of India and Former Chairman of Tamilnadu Mercantile Bank Ltd., He is a B.A graduate. He also holds C.A.I.I.B. degree. He has 35 years of banking experience. He joined Reserve Bank of India, as Junior Officer, in 1966. He held the position of General Manager and Chief General Manager in RBI.He has vast experience in banking industry and specialized in Credit Appraisal, Internal banking, Human Resources, Management Development etc. Dr. M.Rajiakodi, - Trustee Dr. M.Rajiakodi, is the Professor and Head of the department of Rural Development Science and Post Graduate Department of Social Work in P.M. Thevar College, Usilampatti. He holds a
- 86. Doctorate Degree inRural Development and has more than two decades of teaching experience at Postgraduate level. He is a resource person in Rural Development and has Presented papers on Various Topics in different Seminars and Conferences. He has authored many books on Rural Development. “Computer Application and Rural Development” is his recent publication. Team: CDC has a work force of 150 men and women for our staff. These men and women have both qualification and dedication. They are trained in such a way that they take the activities and messages to the grass root level. Many are living in the villages of our programme area We have formed a core team to suggest the board of matters connected with Staff training, Staff welfare, Promotion etc., They are free to suggest ways and means of the promotion of the activites of the organization. The following are the Members of our Core Team: 1. Mrs. P. Olivarani, General Manager ( Development ). 2. Mr. P.Senthil Prabhu, General Manager ( Human Resource ). 3. Mrs. S.Shanmuga Priya, Assistant General Manager (MIS). 4. Mr. B. Udhayakumar, Finance Officer. 5. Mr. T. Manikandan, Regional Manager. Child Rights Programmes
- 87. CDC has formedVillage Level Education Committees to facilitate the care of school going children and dropouts. CDC helps in getting and in the distribution of free books, scholarships and free bus passes. Free hostels are made available by the education committee for the poorest of the poor students from the Government, private institutions. CDC has attained 2 child labour free villages, It takes maximum efforts to minimize the rate of school drop-outs. The children, who have laboured had to improve the economic status of their families in rural area, have been liberated with the help of CRY International. CDC provides awareness programme on the importance of child education through cultural programmes such as street plays, folk songs and puppet shows. It also conducts enrolment campaign for school children every year. Environmental Conservation As the villages in the foot hill beds are dependent on the hills that supply them food and fodder they are educated in the conservation of bio-diversity i.e. environment. CDC actively participates in the National Environmental Awareness Campaigns. It frequently conducts camps, workshops and seminars on environmental awareness. a) Sustainable Eco -Technology In an attempt to apply eco - friendly sustainable technology, smokeless Chulas and soak pits have been constructed. b) Wasteland Development
- 88. To carry outwasteland development a nursery of 96,000 seedlings of diversified economically and ecologically important species have been raised and they have been planted in the degraded areas by involving the entire community in the plantation programme. Seedlings have been distributed to small and marginal farmers for greening the environment with the help of NAEB, Government of India, at New Delhi. At present, CDC collaborates with the TamilNadu comprehensive wasteland programme at Mayiladumparai Block of Theni District. CDC is involved in the Afforestation projects in villages of Theni, Madurai and Dindigul Districts in collobration with the State Forest Department, Govt. of Tamilnadu. Rural Folk Arts Development CDC encourages the rural folk artists to develop their traditional folk songs, drama and dances. The rural youth are motivated to popularize the cultural folk arts. EXTERNAL ACTIVITIES Health: We fully agree with the proverb 'Health is Wealth' and work towards health for all. We coordinate with the government health department and help them introduce health programmes into the villages. Polio plus scheme was thoroughly followed and all the children below five years at our villages were given polio drops with the dedicated support of our staff to the government staff. Our women staff coordinate with the Village Health Nurse in helping the women on Antenatal care and post natal care. We have good contact with Aravind Eye Hospitals at Theni and convened free Eye Camps at different locations to help elders to restore eye sight by fixing Intra Ocular Lens. We helped 124
- 89. physically challenged personsto get organized into a Federation. Our staff helped 25 of them to get identity card from the District Rehabilitation Office to enjoy the government helps. We also organized camps to create awareness on Female Infanticide and Family Planning. Animal Rights: In order to secure animal rights, SABINA FUND, USA supports NGOs who propagate MEAT OUT concept. We coordinate with them and encourage pure vegetarianismin our villages. We celebrate WORLD ANIMALS DAY on 2nd October every year shouting slogans such as "SAVE ANIMALS and BE VEGETARIAN". MEAT OUT day was celebrated on 20th March 2004. Special lectures were delivered by veteran Gandhian Leaders to stop slaughter animals and to be vegetarians. Street plays were enacted by youths to explain stopping cruelty to animals. A procession with placards and banners on Meat Out concept was organized with the participation of more than 2000 persons. Peace Making: As a member of the Gandhian Institution PARTNER COUNCIL INDIA based at New Delhi our staff along with SHGs leaders attend periodical seminars and workshops on PEACE and SOLIDARITY. Peace to All concepts is being spread out through these programs, which we implement and monitor through two of our staff. New Initiatives: CDC has entered into the new area of land rights for women.
- 90. 4. Detail reporton any 5 Cooperatives in India:- 1. AMUL:- Amul is an Indian dairy cooperative, based at Anand in the state of Gujarat, India.[2] The word amul (अमूल) is derived from the Sanskritword amulya (अमूल्य), meaning priceless.[3] The co-operative was initially referred to as Anand Milk Federation Union Limited hence the name AMUL. Formed in 1946, it is a brand managed by a cooperative body, the Gujarat Co-operative Milk Marketing Federation Ltd. (GCMMF), which today is jointly owned by 3 million milk producers in Gujarat.[4] Amul spurred India's White Revolution, which made the country the world's largest producer of milk and milk products.[5] In the process Amul became the largest food brand in India and has ventured into markets overseas. Dr Verghese Kurien, founder-chairman of the GCMMF for more than 30 years (1973–2006), is credited with the success of Amul.[6] History Amul the co-operative registered on 1 December 1946 as a response to the exploitation of marginal milk producers by traders or agents of the only existing dairy, the Polson dairy, in the small city distances to deliver milk, which often went sour in summer, to Polson. The prices of
- 91. milk were arbitrarilydetermined. Moreover, the government had given monopoly rights to Polson to collect milk from mikka and supply it to Bombay city.[7][8] Angered by the unfair trade practices, the farmers of Kaira approached Sardar Vallabhbhai Patel under the leadership of local farmer leader Tribhuvandas K. Patel. He advised them to form a cooperative and supply milk directly to the Bombay Milk Scheme instead of Polson (who did the same but gave them low prices).[9] He sent Morarji Desai to organise the farmers. In 1946, the milk farmers of the area went on a strike which led to the setting up of the cooperative to collect and process milk.[8] Milk collection was decentralized, as most producers were marginal farmers who could deliver, at most, 1–2 litres of milk per day. Cooperatives were formed for each village, too.[10] The cooperative was further developed and managed by Dr.Verghese Kurien with H.M. Dalaya. Dalaya's innovation of making skim milk powder from buffalo milk (for the first time in the world) and a little later, with Kurien's help, making it on a commercial scale,[11] led to the first modern dairy of the cooperative at Anand, which would compete against established players in the market. The trio's (T. K. Patel, Kurien and Dalaya's) success at the cooperative's dairy soon spread to Anand's neighbourhood in Gujarat. Within a short span, five unions in other districts – Mehsana, Banaskantha, Baroda, Sabarkantha and Surat – were set up.[8] To combine forces and expand the market while saving on advertising and avoid competing against each other, the GCMMF, an apex marketing body of these district cooperatives, was set up in 1973. The Kaira Union, which had the brand name Amul with it since 1955, transferred it to GCMMF.[12] In 1999, it was awarded the "Best of all" Rajiv Gandhi National Quality Award.[13] Adding to the success, Dr. Madan Mohan Kashyap (faculty Agricultural and Engineering Department, Punjab Agricultural University Ludhiana), Dr. Bondurant (visiting faculty) and Dr Feryll (former student of Dr Verghese Kurien), visited the Amul factory in Gujarat as a research team headed by Dr. Bheemsen. Shivdayal Pathak (ex-director of the Sardar Patel Renewable Energy Research Institute) in the 1960s. A milk pasteurization systemat the Research Centre of Punjab Agricultural University (PAU) Ludhiana was then formed under the guidance of Kashyap.
- 92. About GCMMF The GCMMFis the largest food products marketing organisation of India. It is the apex organisation of the dairy cooperatives of Gujarat. It is the exclusive marketing organisation for products under the brand name of Amul and Sagar.[14] Over the last five and a half decades, dairy cooperatives in Gujarat have created an economic network that links more than 3.1 million village milk products with millions of consumers in India.[citationneeded] The daily milk procurement of GCMMF is around 13 million liters per day. It collects milk from about 16914 village milk cooperative societies, 17 member unions and 24 districts covering about 3.18 million milk producer members. More than 70% of the members are small or marginal farmers and landless laborers including a sizeable population of tribal folk and people belonging to the scheduled castes.[14] The three-tier "Amul Model" The Amul Model is a three-tier cooperative structure. This structure consists of a dairy cooperative society at the village level affiliated to a milk union at the district level which in turn is federated into a milk federation at the state level. Milk collection is done at the village dairy society, milk procurement and processing at the District Milk Union and milk and milk products marketing at the state milk federation. The structure was evolved at Amul in Gujarat and thereafter replicated all over the country under the Operation Flood programmer. It is known as the 'Amul Model' or 'Anand Pattern' of dairy cooperatives. The main functions of the VDCS are: Collection of surplus milk from the producers of the village and payment based on quality and quantity, Providing support services to the members like veterinary first aid, artificial insemination services, cattle-feed sales, mineral mixture sales, fodder and fodder seed sales, conducting training on animal husbandry and dairying, Selling liquid milk for local consumers of the village, Supplying milk to the District Milk Union.
- 93. State Cooperative MilkFederation (Federation) The main functions of the federation are as follows: Marketing of milk and milk products processed/manufactured by Milk Unions, Establish a distribution network for marketing of milk and milk products, Arranging transportation of milk and milk products from the Milk Unions to the market, Creating and maintaining a brand for marketing of milk & milk products, Providing support services to the Milk Unions and members like technical inputs, management support and advisory services, Pooling surplus milk from the Milk Unions and supplying it to deficit Milk Unions, Establish feeder-balancing dairy plants for processing the surplus milk of the Milk Unions, Arranging for common purchase of raw materials used in manufacture/packaging of milk products, Decide on the prices of milk and milk products to be paid to Milk Unions, Decide on the products to be manufactured at Milk Unions and capacity required for the same. Conduct long-term milk production, procurement and processing as well as marketing planning. Arranging finance for the Milk Unions and providing them technical know-how. Designing and providing training in cooperative development and technical and marketing functions. Conflict resolution and keeping the entire structure intact. Today, there are around 176 cooperative dairy unions formed by 125,000 dairy cooperative societies, having a total membership of around 13 million farmers on the same pattern, who are processing and marketing milk and milk products profitably, be it Amul in Gujarat or Verka in Punjab, Vijaya in Andhra Pradesh, Milma in Kerala, Gokul in Maharashtra, Saras in Rajasthan or a Nandini in Karnataka. This process has created more than 190 dairy processing plants spread all over India with large investments by these farmers' institutions. These cooperatives
- 94. today collect approximately23 million kg of milk per day and pay an aggregate amount of more than Rs. 125 billion to the milk producers in a year.[citation needed] Impact of the "Amul Model” The effects of Operation Flood Programme are appraised by the World Bank in an evaluation report. It has been proved that an investment of Rs. 20 billion over 20 years under Operation Flood in the 1970s and 80s has contributed in increase of India’s milk production by 40 million metric tonnes (MMT), i.e., from about 20 MMT pre-Operation Flood to more than 60 MMT at the end of Operation Flood. Thus, an incremental return of Rs. 400 billion annually have been generated by an investment of Rs. 20 billion over 20 years. India’s milk production continues to increase and now stands at 90 MMT(as of 2012). Despite this fourfold increase in production, there has not been a drop in the prices of milk during the period while production has continued to grow. Due to this movement, the country’s milk production tripled between the years 1971 and 1996. Similarly, the per capita milk consumption doubled from 111 gm per day in 1973 to 222 gm per day in 2000. The Amul brand GCMMF (AMUL) has the largest distribution network for any FMCG company. It has nearly 50 sales offices spread all over the country, more than 5000 wholesale dealers and more than 700000 retailers. Amul became the world's largest vegetarian cheese[15] and the largest pouched-milk brand. AMUL is also the largest exporter of dairy products in the country. AMUL is available today in over 40 countries of the world. AMUL is exporting a wide variety of products which include whole and skimmed milk powder, cottage cheese (Paneer), UHT milk, clarified butter (Ghee) and indigenous sweets. The major markets are USA, West Indies, and countries in Africa, the Gulf Region, and SAARC neighbours, Singapore, The Philippines, Thailand, Japan and China, and others such
- 95. as Mauritius, Australia,Hong Kong and a few South African countries. Its bid to enter the Japanese market in 1994 did not succeed, but it plans to venture again.[16] In September 2007, Amul emerged as the leading Indian brand according to a survey by Synovate to find out Asia's top 1000 Brands.[17] In 2013, Amul was named the Most Trusted brand in the Food and Beverages sector in The Brand Trust Report, published by Trust Research Advisory,[18] where as in the 2014 edition of The Brand Trust Report,[19] Amul is ranked 7th in the list of India's Most Trusted Food and Beverages brands. Products Amul's product range includes milk powders, milk, butter, ghee, cheese, Masti Dahi, Yoghurt, Buttermilk, chocolate, ice cream, cream, shrikhand, paneer, gulab jamuns, flavoured milk, basundi, Amul Pro brand and others. Amul PRO is a recently launched brown beverage just like bournevita and horlicks offering whey protein, DHA and essential nutrients. In January 2006, Amul launched India's first sports drink, Stamina, which competes with Coca Cola's Powerade and PepsiCo's Gatorade. Amul offers mithaimate which competes with Milkmaid by Nestle by offering more fat at lower price. In August 2007, Amul introduced Kool Koko, a chocolate milk brand extending its product offering in the milk products segment. Other Amul brands are Amul Kool, a low-calorie thirst quenching drink; Masti Butter Milk; and Kool Cafe, ready to drink coffee. Amul's icecreams are made from milk fat and thus are icecreams in real sense of the word, while many brands in India sell frozen desserts made from vegetable fat. Amul's sugar-free Pro-Biotic Ice-cream won The International Dairy Federation Marketing Award for 2007 2. The Adarsh Housing Society:- The Adarsh Housing Society is a posh, 31 storey building constructed on prime real estate in Colaba, Mumbai, for the welfare of war widows and personnel of India’s Ministry of Defence.
- 96. Over a periodof several years, politicians, bureaucrats and military officers allegedly conspired to bend several rules concerning land ownership, zoning, floor space index and membership get themselves flats allotted in this cooperative society at below-market rates The scamwas unearthed in November 2010 which forced the then Chief Minister of Maharashtra, Ashok Chavan, to resignIn 2011, a report of the Comptroller and Auditor General of India (CAG) said, "The episode of Adarsh Co-operative Housing Society reveals how a group of select officials, placed in key posts, could subvert rules and regulations in order to grab prime government land - a public property - for personal benefit. In January 2011, the Maharashtra government set up a two-member judicial commission to inquire into the matter. The commission was headed by retired High Court judge Justice J A Patil, with N N Kumbhar acting as member secretary. After deposing 182 witnesses over 2 years, the commission submitted its final report in April 2013 to the Maharashtra government. The report highlighted 25 illegal allotments, including 22 purchases made by proxy.[5] The report also indicted four former chief ministers of Maharashtra: Ashok Chavan, Vilasrao Deshmukh, Sushilkumar Shinde and Shivajirao Nilangekar Patil, 2 former urban development ministers: Rajesh Tope and Sunil Tatkare and 12 top bureaucrats for various illegal acts. The allottees included Devyani Khobragade.[6][7] The Central Bureau of Investigation (CBI), the Income Tax Department and the Enforcement Directorate (ED) are currently investigating allegations that three former chief ministers of Maharashtra - Sushilkumar Shinde, Vilasrao Deshmukh and Ashok Chavan - were involved in the scam. Alleged violations The Adarsh Society high-rise was constructed in the Colaba locality of Mumbai. This is considered a sensitive coastal area by the Indian Defence forces and is the location of various Indian defence establishments.[10] The society is also alleged to have violated Indian environment ministry rules.[11] The scamis notable for the fact that it was enacted over a period of ten years and required the active involvement of successive officials in many crucial posts. Rules and regulations across
- 97. many departments andministries, both at the Centre and the state of Maharashtra, were flouted or bent to allow for the construction of the building. Some of the more blatant transgressions included: obtaining a No Objection Certificate (NOC) from the Army towards construction of the building in a sensitive zone, getting the Mumbai Metropolitan Region Development Authority (MMRDA) development plan modified, and obtaining another NOC for residential development in a Coastal Regulation Zone, often through manipulation of records and misrepresentation of facts. Efforts by honest officers to bring this to the notice of top officials were ignored.[12] The issue was first raised in a newspaper report in 2003 but did not evoke any official reaction.[13] In 2010, it was again raised by various newspapers and TV channels. Questions were raised about the manner in which apartments in the building were allocated to bureaucrats, politicians and army personnel who had nothing to do with the Kargil War and the way in which clearances were obtained for the construction of the building of the Adarsh Society.[14][15] It had led to the resignation of the then Chief Minister, Ashok Chavan.[16]Some of the current allottees of the flats in the Adarsh co-operative society building have offered to return their flats, denying allegations that they were allotted flats because they influenced or helped, in some manner, the construction of the society by violating the rules.[17] In an interview to The Hindu published on 26 March 2012, General VK Singh, the Chief of Army Staff ascribed many of the attempts to malign him during his tenure to, amongst others, those he described as "the Adarsh lobby", those directly connected to the scam, as well as those who were affected by his efforts to rid the army of corruption. 3. Mother dairy:- Mother Dairy, set up in 1974, is a wholly owned subsidiary of National Dairy Development Board (NDDB) of India. Mother Dairy's range of products include the brands Mother Dairy (milk, milk products, curd, ice cream, butter, dairy whitener etc), Dhara (range of edible oils) and Safal (range of fresh fruits and vegetables, frozen vegetables, fruit juices).
- 98. Mother Dairy wasset up under the Operation Flood Programme in Delhi. It later expanded in Mumbai, Punjab and eastern India. Future plans include expansion to South India. Mother Dairy Foods Processing Ltd, presently known as Mother Dairy Fruit & Vegetable Private Limited, Patparganj,Delhi, with a present turnover of about $500 million was set up in 1974 under the Operation Flood Programme. It is now a subsidiary company of National Dairy Development Board (NDDB). Mother Dairy Foods Processing Ltd offers the following products: Mother Dairy markets dairy products like Liquid Milk, Ice Creams, Flavoured Milk, Dahi, Lassi, Mishti Doi, Ghee, White Butter, Table Butter, Cheese, SMP, Dairy Whitener, UHT Milk, Dhara range of edible oils and the Safal range of fresh Fruits & Vegetables, Frozen Vegetables and Fruit Juices at a national level, through its sales and distribution networks, for marketing food items. Mother Dairy milk (Bulk Vended Milk) is fortified with vitamin A @2000 IU per litre of milk as a part of social accountability. This program was started with the Mother Dairy, Delhi, since February 1980and there after Mother Dairy is continuing this program on their own as a social responsibility without having any financial assistance fromthe Government as well as since it is felt that BVM is generally consumed by the middle / lower middle / poor strata of the society. It is also found that the dietary practices adopted by these classes are deficient in Vitamin A. Mother Dairy sources significant part of its requirement of liquid milk from dairy cooperatives. Similarly, Mother Dairy sources fruits and vegetables from farmers / growers associations. Mother Dairy also contributes to the cause of oilseeds grower cooperatives that manufacture/ pack the Dhara range of edible oils by undertaking to nationally market all Dhara products. It is Mother Dairy’s constant endeavor to (a) Ensure that milk producers and farmers regularly and continually receive market prices by offering quality milk, milk products and other food products to consumers at competitive prices and; (b) Uphold institutional structures that empower milk producers and farmers through processes that are equitable.
- 99. At Mother Dairy,processing of milk is controlled by process automation whereby state-of-the- art microprocessor technology is adopted to integrate and completely automate all functions of the milk processing areas to ensure high product quality/ reliability and safety. Mother Dairy is an IS/ ISO-9002, IS-15000 HACCP and IS-14001 EMS certified organization. Moreover, its Quality Assurance Laboratory is certified by National Accreditation Board for Testing and Calibration Laboratory (NABL)-Department of Science and Technology, Government of India. Mother Dairy markets approximately 2.8 million liters of milk daily in the markets of Delhi, Mumbai, Saurashtra and Hyderabad. Mother Dairy Milk has a market share of 66% in the branded sector in Delhi where it sells 2.3 million liters of milk daily and undertakes its marketing operations through around 14,000 retail outlets and 845 exclusive outlets of Mother Dairy. The company’s derives significant competitive advantage from its unique distribution network of bulk vending booths, retail outlets and mobile units. Mother Dairy ice creams launched in the year 1995 have shown continuous growth over the years and today boasts of approximately 62% market share in Delhi and NCR. Mother Dairy also manufactures and markets a wide range of dairy products that include Butter, Dahi, Ghee, Cheese, UHT Milk, Lassi & Flavored Milk and most of these products are available across the country. The company markets an array of fresh and frozen fruit and vegetable products under the brand name SAFAL through a chain of 400+ own Fruit and Vegetable shops and more than 20,000 retail outlets in various parts of the country. Fresh produce from the producers is handled at the Company’s modern distribution facility in Delhi with an annual capacity of 200,000 MT. An IQF facility with capacity of around 75 MT per day is also operational in Delhi. A state-of-the-art fruit processing plant of fruit handling capacity of 120 MT per day, a 100 percent EOU, setup in 1996 at Mumbai supplies quality products in the international market. With increasing demand another state-of-the-art fruit processing plant has been set up at Bangalore with fruit handling capacity of around 250 MT per day.
- 100. Mother Dairy hasover the last 3 decades, harnessed the power of farmer cooperatives to deliver a range of delicious products and bring a smile on your face. In times to come, Mother Dairy shall strive to remain one of India’s finest food companies. Quality Standards:- Mother Dairy is an IS/ ISO 9002, IS 15000 HACCP and IS 14001 EMS certified organization. Mother Dairy, Delhi has been awarded ISO 9001:2000 (Quality Management Systems), HACCP, 2002 RvA (Food Safety Management Systems) and ISO 14001:2004 (Environmental Management Systems) Certifications. Moreover, National Accreditation Board accredits its Quality Assurance Laboratory as per ISO/IEC 17025:1999 for Testing and Calibration Laboratories, Department of Science and Technology, Government of India. 4. Indian Coffee House:- The India Coffee Houses were started by the Coffee Board in early 1940s, during British rule. In the mid 1950s the Board closed down the Coffee Houses, due to a policy change. The thrown- out workers then took over the branches, under the leadership of the communist leader A. K. Gopalan and renamed the network as Indian Coffee House. The first Indian Coffee Workers Co- Operative Society was founded in Bangalore on August 19, 1957. The first Indian Coffee House was opened in New Delhi on October 27, 1957.[1] Gradually, the Indian Coffee House chain expanded across the country. Dates of the formation of the societies: Place Date of formation Bangalore August 19, 1957
- 101. Delhi October 29,1957 Pondicherry January 31, 1958 Thrissur February 10, 1958 Lucknow February 02, 1958 Nagpur February 02, 1958 Jabalpur April 4, 1958 Mumbai (Bombay) July 3, 1958 Kolkata (Calcutta) September 13, 1958 Tellicherry July 8, 1958 Pune October 14, 1958 Later Bellary and Madras (Chennai) Societies were separated from their mother societies. The movement marked its golden jubilee in the year 2007. Management:- There are 13 co-operative societies in the country to run the coffee houses. These societies are governed by managing committees elected from the employees. There is also a federation of the co-operative societies as the national umbrella organisation to lead these societies."[3]. Kerala:- Kerala has the largest number of Indian Coffee Houses. Advocate T. K. Krishnan, a Communist Leader of Thrissur and Nadakkal (N. S.) Parameswaran Pillai, or "Coffee House Pillai" the State Secretary of the India Coffee Board Labour Union and a thrown-out employee of ICH were the
- 102. founders of ICHsin Kerala. The first Indian Coffee House of Kerala was started in Thrissur in 1958. It was also the fourth ICH in the country. It was inaugurated by A. K. Gopalan on March 8, 1958. There is also an alternative history book about the ICH movement, in Malayalam, the regional language of Kerala - Coffee Housinte Katha or History of Coffee House by Nadaakkal Parameswaran Pillai. This is the only published written history of ICH movement in any language. All details of the movement referred in this article is based on that book. Kolkata:- The Indian Coffee House has several branches in Kolkata, including the College Street branch, Central Avenue branch, Medical College Kolkata branch and Jadavpur branch. These are favourite hang-out places among the students and youth, although one can see several old-timers frequenting the coffee houses on a regular basis. Coffee House at College Street:- The most famous Coffee House branch in Kolkata is the one at the College Street, also known as the "Coffee House at College Street". It is situated opposite the Presidency College, Kolkata and has been for a long time a regular hang out for students (and ex-students) of the Presidency College, University of Calcutta, and other institutions in College Street. The history of the Coffee House at College Street can be traced to Albert Hall, which was founded in April 1876.[4] Later, the Coffee Board decided to start a coffee joint from the Albert Hall in 1942. Notable citizens, including Rabindranath Tagore and Subhas Chandra Bose, were frequent visitors to the place.[5] In 1947, the Central Government changed the name of the place to "Coffee House".[6] The place became a meeting place for the poets, artistes, literati and people from the world of art and culture. In 1958, the management decided to shut down the Coffee House, but it was re-opened the same year, after professors of Presidency College and Calcutta University rushed off a special petition to the government, to save the heritage place.
- 103. The prestige ofthe Coffee House increased with regular visitors such as Satyajit Ray, Manna Dey, Amartya Sen, Mrinal Sen and Aparna Sen[6] The Coffee House is of historical significance for being the rendezvous of innumerable versatile people, from its inception to date. Scholars, editors, artists and writers like Jagadish Chandra Bose, Ritwik Ghatak, Narayan Gangopadhyay, Sunil Gangopadhyay, Sanjeev Chattopadhyay, Samaresh Majumdar, Subhas Mukhopadhyay and Shakti Chattopadhyay) have been just a few among the patrons of the restaurant. Several literary magazines owe their origin to the inspiration from the adda sessions at this coffee house. Though popularly known as College Street Coffee house, this branch is actually on Bankim Chatterjee Street. The coffee house is famous for its adda sessions, and as the breeding place of several political and cultural personalities and movements. Many people come here just for the sake of adda and just being a part of the long talking sessions. Several talented and illustrious persons from different streams have been thronging this renowned adda for a long time. In 2006, a huge financial crunch kept the co-operative society from undertaking renovation of the coffee house. Though a few companies such as Asian Paints approached the society with offers to renovate the restaurant, the offers were refused due to clash of norms and conditions.[5] Other places:- The Indian Coffee House branch in Sector 17 of Chandigarh was opened in 1964 and remained popular among professionals, journalists, doctors, bureaucrats, lawyers and senior officials.[7]. The branch originally operated in Sector 22, and was shifted to Sector 17 in 1971. The Coffee House on the Punjab University campus is popular among students. The Indian Coffee House branch in Dharamsala used to be a popular hang-out of intelligentsia in the city. It was set up, after the district administration approached the Indian Coffee Workers' Co-operative Society, Delhi in 1991. The society decided to close it down in 2006, after losses ran over 35 lakh rupees.
- 104. 5. Pratibha MahilaSahakari Bank:- Pratibha Mahila Sahakari Bank ( Pratibha Women Cooperative Bank ) is a cooperative bank founded by Pratibha Patil in 1973 in Jalgaon in Maharashtra with the objective of empowering women. Pratibha Patil is a senior leader of Indian National Congress and President of India. Pratibha Patil was the founding chairperson of the bank and later one of its directors along with many of her relatives. She is currently one of the 34 respondents in an ongoing case in the Aurangabad bench of the Bombay High Court on the subject of mismanagement of the bank and misappropriation of funds. o Reserve Bank of India (RBI), revoked the licence of the bank in 2003 after it was found out that the bank had illegally waived interest on loans given to many of Pratibha Patil’s family members . Ministry of Finance on April 26, 2002, asked the RBI to inquire into allegations of fund irregularities after receiving a number of complaints from the Cooperative Bank Employees Union and small depositors of the bank. In its 28-page inspection report noted that the bank had been declared “weak” since 1995 and after the 2002 inspection was being classified as “sick.” The report revealed: The real or exchangeable value of the bank’s paid-up share capital and reserves stands at minus Rs 197.67 lakh. Thus, the bank is not having adequate assets to meet its liabilities. The bank does not comply with the RBI’s requirement of minimum share capital.
- 105. The ratioof the net erosion to net owned funds of the bank is as high as 312.4% and the erosion in the value of the bank’s assets has not only wiped out its owned funds but has also affected the deposits to the extent of Rs 197.67 lakh, forming 26% of total deposits. The gross NPAs of the bank amount to 65.8% of the total loans and advances. The Board has not made any concerted effort to improve the bank’s financial position and bring it out of the weak status. The RBI further stated in the report: “Pratibha Patil is the founder member of the bank, who is a politically influential personality. She has made all her relatives as directors of the bank and the bank is being run as good as a family business. Because of the influence of respondent no 8 (Prathiba Patil) the bank has given various loans to the relatives and to a sugar factory of which she is a director.” “Her relatives have not paid back the loans. Most of the loans were given without security. Most of the loans are closed” Action :- On February 25, 2003, RBI executive director P.B. Mathur signed the note revoking the bank’s licence. Depositors :- Many depositors lost their life's saving.Many had made deposits in the bank as it was founded by Pratibha Complaints :- As per complaints filed by the bank’s union leaders, as many as a dozen of Patil’s relatives were granted loans . The list of relatives who received loans from her bank, meant for improving the plight of Jalgaon people, women in particular, includes her brothers and nephews.
- 106. The loan waiverswere given to direct relatives like Anjali Dilipsingh Patil (Pratibha Patil’s niece), Kavita Aravind Patil (sister-in-law of Pratibha Patil) and Rajkaur Dilipsingh Patil (another sister- in-law of Pratibha Patil). Besides, many others too who are still close to Patil, were given benefits flouting banking norms. The writ petition filed by the banks’ depositors in the High Court has made serious and more direct allegations against the founder chairperson Pratibha Patil. The former president of employees union has alleged that the bank collected Rs 4,556 from its employees for the Kargil war victims but failed to deposit the amount in the national fund. Dilip Singh Patil the elder brother of Pratibha Patil who was legal advisor for the bank took loan from the bank and did not repay. Morever he had the bank's telephone set up at his home and ran the bill of over Rs 20 lakhs talking to stockbrokers at Mumbai.