The Sodhani Committee made several recommendations to promote NRI investments in India and widen the foreign exchange market:
1) It recommended merging the 40% and 100% schemes for NRI investments and allowing 100% repatriation for more eligible companies without prior permission.
2) It recommended granting banks the power to provide housing loans to NRIs.
3) It recommended allowing unrestricted investments by NRIs in real estate, sick units, and educational institutions.
4) It recommended expanding the foreign exchange market by including more participants like IDBI and ICICI and making RBI interventions more selective.
The RBI accepted most of these recommendations by amending various regulations and
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Holding company first came into existence in the US. It was created to overcome the restrictions imposed by the Anti-trust legislation. They were formed because businessmen wanted to have concerns under common control and within the framework of law.
Under the companies Act, 1956, a holding company is any company which holds more than half of the equity share capital of other companies or controls the composition of the board of directors of other companies. Type of business organization that allows a firm (called parent) and its directors to control or influence other firms (called subsidiaries). This arrangement makes venturing outside one's core industry possible and, under certain conditions, to benefit from tax consolidation, sharing of operating losses, and ease of divestiture. The legal definition of a holding company varies with the legal system. Some require holding of a majority (80 percent) or the entire (100 percent) voting shares of the subsidiary whereas other require as little as five percent.
Liquidation process under the IBC is dedicated towards ensuring that the assets of the insolvent company are properly valued. Sold and the profits of it are properly distributed among the claimants. Read through this blog and know about its process.
This presentation have the detailed analysis of the Indian banking sector, how it has evolved and reformes that have come gradually.It also has a classic case of merger of ICICI bank with BOM.
Holding company first came into existence in the US. It was created to overcome the restrictions imposed by the Anti-trust legislation. They were formed because businessmen wanted to have concerns under common control and within the framework of law.
Under the companies Act, 1956, a holding company is any company which holds more than half of the equity share capital of other companies or controls the composition of the board of directors of other companies. Type of business organization that allows a firm (called parent) and its directors to control or influence other firms (called subsidiaries). This arrangement makes venturing outside one's core industry possible and, under certain conditions, to benefit from tax consolidation, sharing of operating losses, and ease of divestiture. The legal definition of a holding company varies with the legal system. Some require holding of a majority (80 percent) or the entire (100 percent) voting shares of the subsidiary whereas other require as little as five percent.
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an analysis about the Indian banking system and the analysis of two major banking sector reforms; Narasimham committee (1 and 2) on banking sector reforms
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Stimulus package announced by Government of India to tackle the economic distress caused by corona virus or covid-19. The stimulus package has been named as 'Atmanirbhar Bharath'.
The total package size is about 10% of India's GDP.
Date of announcement: 13 May 2020.
Aatmanirbhar Bharat Scheme announced by Government of India in the wake of COVID 19. The whole scheme was divided into 5 parts. It is the official PPT of Part 1 entailing the inclusion of MSMEs in the development of economy.
The Securities and Exchange Board of India was established by the Government of India on 12th April 1988 as an interim administration body to promote orderly and healthy growth of the securities market and for investor protection.
It was functioned under the overall administrative control of the Ministry of Finance of the GOI.
The SEBI was given the statutory powers on 30th Jan 1992 through an Ordinance.
The Ordinance was later replaced by an Act of Parliament known as the Securities and Exchange Board of India Act 1992.
AI powered Decision Making in Banks - How Banks today are using Advanced analytics in credit Decisioning, enhancing customer life time value, lower operating costs and stronger customer acquisition
1. SODHANI COMMITTEE
(on Forex Markets)
Prepared By- Bhargav Dudugadapa - 11020241008
Eshant Gaur - 11020241040
Kushagra Pandey - 11020241047
2. Introduction
• The Sodhani Committee
was set up to look into::
• promotion of NRI investments in
India
• widening and deepening of
foreign exchange market.
• Report was submitted to
the RBI in June 1995
• The Sodhani committee has
made 33 recommendations
and of these 25 reco-
mmendations called in
action on part of RBI.
4. Investments in Capital Market
% Scheme
40
• NRIs/ OCBs are permitted to subscribe to new issues of shares
(equity & preference) or convertible debentures of any new or
existing company with the right of repatriation
• Restriction that aggregate issue to non-residents does not
exceed 40 % of the face value of the new issue.
• RBI permission needed.
• Such investment can be made only in private or public limited
companies raising capital for setting up new industrial/
manufacturing activities.
• Investment under this scheme can also be made in new or
existing companies engaged in the following areas of activity:
• Hospitals ( including diagnostic centres)
• Hotels with 3,4 and 5 start rating
• Shipping
• Development of computer software
• Oil exploration services
5. 100 % Scheme
NRIs./ OCBs are permitted to invest in priority
industries and in Indian Companies primarily engaged
in export trading activity, with full repatriation benefits
upto 100% of the new issue of shares.
What did Sodhani Committee recommend ?
Merge both schemes and allow 100 % repatriation to
companies eligible
for 40 % scheme and no prior permission required
RBI Obliged :: Amendments to Sections 19(1) and
29(1)(b) of FERA
6. Capital Markets Contd.
• Indian companies are required to obtain permission
from RBI to issue shares/debentures to NRIs/OCBs.
• Thereafter NRIs/OCBs are required to come to RBI
for approval for making investments in
shares/debentures, and again at the time of
disinvestment.
What did Sodhani Committee recommend ?
One general Permission
RBI obliged::amendment in Section
10C.11 Investment with Repatriation Benefits dated
3rd June 2006
7. Real estate
• lock-in period of 3 years and ceiling of 16% on
profits from investments in housing and real estate
What did Sodhani Committee recommend ?
• Investments with no holds bar.
RBI Obliged::Press Note 2 of 2005 dated March 3, 2005
As an extension investments in
townships, housing, infrastructure and construction/
development projects was also allowed
8. Sick Units
• The restrictions on investment by NRIs in sick units
with a lock-in period of five years
• the eligibility criteria that the shares of the company
should have been quoted below par for two years
What did Sodhani Committee recommend ?
That such power be granted
RBI Obliged: Amendments in section 10C.11 to
10C.19, Investment with Repatriation
benefits in Exchange Control Manual.
9. Educational Institutions
What did Sodhani Committee recommend ?
• Investments by NRIs in educational institutions in
medical, management and technical areas were
to be on non-repatriation basis
RBI Obliged::RBI Notification No- FERA 113 and FERA
114
10. Power to banks
• No power for banks to grant housing loans to NRIs
What did Sodhani Committee recommend ?
That such power be granted
RBI Obliged: Amendments in sections
10D.2, 10D.3, 10D.4 , Loans in India to non residents
was made in exchange control manual by a notice
dated 03
Jun 2005
12. Need for changes in the
Forex Regulations
• Market players in forex became active in the
seventies, consequent upon the collapse of Bretton
Woods Agreement.
• India was somewhat insulated since stringent
exchange controls prevailed and banks were
required to undertake only cover operations
• In 1978, the RBI allowed banks to undertake intra-
day trading in foreign exchange
13. • The exchange rate of the rupee, which was
pegged to an undisclosed basket of
currencies, was partially floated in March, 1992 and
fully in March, 1993.
• The unification of the exchange rate was
instrumental in developing a market-determined
exchange rate of the rupee, based on demand
and supply in the forex market.
• It was also an important step in the progress
towards current account convertibility, which was
achieved in August, 1994 when India accepted
obligations under Article VIII of IMF’s Articles of
Agreement .
14. Wider Market
What did Sodhani Committee recommend? Market
participants in the foreign exchange
market be enlarged by including IDBI, ICICI,
etc.
Accepted vide Credit Policy dated April 15, 1997
15. Market Intervention
What did Sodhani Committee recommend? Market
intervention by RBI should be
selective and discreet.
Accepted The RBI no longer quotes two way prices
on a daily basis. It intervenes in both Spot and Forward
markets.
Market intervention by RBI should be selective rather
than continuous. Forex swaps may be used as a tool
by RBI to control the forward margins.
16. Bank lending
What did Sodhani Committee recommend?
Banks should be allowed to borrow and lend
upto six months in overseas markets
Accepted vide Credit Policy dated April 3, 1996
17. What did Sodhani Committee recommend?
The removal of the limit of Rs.15 crores for
open position was recommended. This limit
has since been replaced by the limits
specific to the size of the bank.
Accepted The ceiling of Rs 15 Crores was removed
on 1st Jan, 1996. Currently, banks decide their own
Overnight Open Position limits according to the
capital base, volume of merchant
transactions, dealing expertise and infrastructure. They
have to earmark their capital to the extent of 5% of
the open position limit to cover market risk. While the
Limits are decided by the banks, these have to be
approved by the RBI.
18. New Clearing System
What did Sodhani Committee recommend? Setting up
a clearing system for foreign exchange market.
Accepted
Forex Clearing House operations are under trial in
Bombay.