Page 9 - BF Cover January 2021.cdr

RBI CORNER

violation of the provisions of the Securities and Exchange Board of India Registrar of Cooperative Societies,
Advocates Act comes to their notice", that it was unable to proceed with the Maharashtra to issue an order for
it added. proposed transaction. winding up the bank and appoint a

The RBI in October 2015 had advised The Kerala-based gold loan NBFC, in liquidator for it.
banks not to grant fresh permissions or November 2019, had signed a share However, the RBI said, the process of
renew permissions already granted to purchase agreement to acquire IDBI paying the depositors of the bank will
any foreign law firm for opening of Asset Management and IDBI MF Trustee be set in motion. This means, on
liaison office in India till the policy in Company for a consideration of around liquidation, every depositor will receive
this regard is reviewed based on, Rs 215 crore. Through this acquisition up to Rs. 5 lakh from the Deposit
among others, final disposal of the Muthoot was planning to enter the MF Insurance and Credit Guarantee
matter by the Supreme Court. asset management space. Corporation as per usual terms and
The Supreme Court, it said, while According to the agreement, Muthoot conditions. More than 99% of the
depositors of the bank will get full
disposing of the case, held that Finance would have acquired 100 per
payment of their deposits from DICGC.
advocates enrolled under the cent equity shares of IDBI Asset
Advocates Act, 1961 alone are entitled Management held by IDBI Bank and its
to practice law in India and that nominees and IDBI Capital Markets & IBA asks RBI to extend
foreign law firms/companies or foreign Securities, and 100 per cent equity loan recast window
lawyers cannot practice the profession shares of IDBI MF Trustee Company
of law in India. held by IDBI Bank and its nominees, Indian Banks Association (IBA) has
subject to receipt of regulatory made a representation to the RBI to
As such, foreign law firms/companies extend the restructuring window
or foreign lawyers or any other person approvals. outlined by the KV Kamath committee
resident outside India, "are not IDBI Bank had to sell its MF arm after by another three months to March 31,
permitted" to establish any branch being acquired by state-owned 2021, two people familiar with the
office, project office, liaison office or insurance behemoth Life Insurance development said. The window to seek
other place of business in India for the Corporation (LIC) of India since LIC restructuring is set to lapse on
purpose of practicing legal profession, already had an AMC. The fund house December 31.
the circular said. runs 22 schemes with a robust asset
base across products, geography, and Consumer confidence
investors. Global rating agency Moody's
RBI rejects muthoot Investor Service said Muthoot had remained low in Nov: RBI
finance's proposal to robust profitability, which would help survey
acquire IDBI AMC it maintain capitalisation and funding Consumer confidence remained very
at the current strong levels.
The Reserve Bank has rejected Kerala- low in November 2020 compared to a
based Muthoot Finance's proposal to RBI cancels licence of year ago, as reflected in the Current
acquire IDBI Asset Management Situation Index (CSI), as per Reserve
Company (AMC). Karad Janata Sahakari Bank of India's (RBI) Consumer
Bank Confidence Survey.
In a notification to the exchanges,
Muthoot Finance said its request for a The Reserve Bank has canceled the The weak confidence is attributable to
no-objection certificate was not licence of Karad Janata Sahakari Bank consumer sentiments on the general
acceded to by the RBI on the ground to conduct banking business citing that economic situation, employment
that, "the activity of sponsoring a the bank does not have adequate scenario, price levels and household
mutual fund (MF) or owning an AMC finance. This means that the bank is incomes, according to the central
was not in consonance with the activity prohibited from taking any deposit or bank.
of operating a non-banking financial making any repayment. The November 2020 CSI reading came
company (NBFC)". The central bank also requested the in at 52.3 against 85.7 in November

Consequently, Muthoot informed the Commissioner for Cooperation 2019.

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