Skip to main content

Finance Minister Urges PSU Banks to Boost Credit Growth, Maintain Profits

  Finance Minister Nirmala Sitharaman, in a meeting with heads of Public Sector Banks (PSBs) on Friday, urged them to leverage the Reserve Bank of India’s recent  50 basis points rate cut  to accelerate lending towards the productive sectors of the economy. Sources reported that the Finance Minister asked PSBs to maintain the profitability momentum in  FY26 , building on their strong performance last year. The cumulative net profit of 12 PSBs surged to  Rs 1.78 lakh crore in FY25 , marking a 26% rise compared to the previous fiscal. In absolute terms, this meant a profit increase of about  Rs 37,100 crore . Sitharaman also emphasised the importance of financial inclusion, directing banks to onboard more customers under government schemes to ensure broader credit outreach. On  June 6 , the RBI’s monetary policy committee, led by Governor Sanjay Malhotra, cut the benchmark repo rate by  50 basis points to 5.5% . The minister highlighted that PSBs sh...
Post a Comment

SEBI Introduces New Regulations for Mutual Funds and Bond Market

 The Securities and Exchange Board of India (SEBI) has announced several significant changes in regulations that aim to bolster market integrity and enhance investor participation. The board's latest decisions, made on Tuesday, focus on improving surveillance mechanisms within asset management companies (AMCs), adjusting norms for non-convertible debentures (NCDs), and streamlining investment regulations for non-resident investors.

1. Strengthened Surveillance for AMCs

SEBI has mandated asset management companies to implement an “institutional mechanism” designed to detect and deter market abuses such as front-running, insider trading, and misuse of sensitive information. The new regulations will require AMCs to establish:

  • Enhanced Surveillance Systems: To monitor and identify potential misconduct.
  • Internal Control Procedures: To ensure adherence to regulations and internal policies.
  • Escalation Processes: To address identified issues and escalate them appropriately.

This mechanism will be effective once AMCs have fully implemented it. Notably, SEBI has also exempted AMCs from the requirement to record face-to-face communications during market hours, which includes interactions that occur out of the office.

2. Adjustments to Non-Convertible Debentures (NCDs)

To increase non-institutional investor participation in the bond market, SEBI has approved:

  • Reduced Face Value for NCDs: Issuers can now offer NCDs through private placements with a reduced face value of ₹10,000, down from the previous higher minimums.
  • Merchant Banker Requirement: Issuers will need to appoint a merchant banker to assist with the private placement.
  • Simplified Offer Document: Issuers with listed outstanding non-convertible securities can provide audited financials through a web-link or QR code in the offer document, rather than including extensive details.

These changes are expected to make bond investments more accessible to a broader range of investors.

3. Enhanced Flexibility for Foreign Portfolio Investors (FPIs)

SEBI has introduced a new framework to allow increased contributions from non-resident Indians (NRIs), overseas citizens of India (OCIs), and resident individuals (RIs) in FPIs based in International Financial Services Centres (IFSCs) in India. Key points include:

  • 100% Contribution Limit: FPIs can have full contributions from these foreign investors, subject to providing PAN cards or other identification documents.
  • Disclosure Requirements: FPIs must submit documents proving the economic interest and identity of their NRI/OCI/RI constituents.

4. Revisions to Mutual Fund Regulations

SEBI has amended the SEBI (Mutual Funds) Regulations, 1996, to allow equity passive schemes to align their exposure with the weightage of constituents in the underlying index, with an overall cap of 35% on investments in sponsor group companies. This aims to create a level playing field and enhance transparency in index-based investments.

5. New Options for Venture Capital Funds (VCFs)

To address the challenges faced by venture capital funds (VCFs) that were registered under previous regulations and are struggling to liquidate investments within the scheme’s tenure, SEBI has approved a proposal to allow these VCFs to migrate to Alternative Investment Fund (AIF) Regulations. This migration will provide VCFs with additional facilities to manage unliquidated investments more effectively.

Conclusion

SEBI’s latest regulatory updates reflect a commitment to enhancing market transparency, protecting investor interests, and encouraging broader participation in both the bond and equity markets. By strengthening surveillance mechanisms for AMCs, facilitating easier access to NCDs for retail investors, and offering more flexible investment options for NRIs and venture capital funds, SEBI is taking proactive steps to improve the functioning and integrity of India’s financial markets.

Comments

Post a Comment

Popular posts from this blog

Blackstone’s ASK to Hire 70 Bankers Amid Surge in India’s Wealth Management Sector

  Blackstone Inc.’s ASK Group plans to strengthen its foothold in India’s  booming wealth management sector  by hiring  70 new private bankers . This expansion will increase the ASK Private Wealth unit’s total banker strength to  175 by March next year , up from about 105 at present, as confirmed by  Rajesh Saluja , CEO and co-founder of the business, in an interview this week. India is witnessing a sharp rise in its wealthy population, driving a surge in demand for wealth management services. This has led to the emergence of several new firms competing to manage these assets, while established players like ASK Private Wealth, Bain Capital-backed  360 One WAM Ltd , and PAG-backed  Nuvama Wealth Management Ltd  are rapidly expanding their teams to retain market leadership. Experts believe that the wealth management space in India will see intense competition in the coming years, with firms vying to acquire and retain high-net-worth individual ...
Post a Comment
Read more

Finance Minister Urges PSU Banks to Boost Credit Growth, Maintain Profits

  Finance Minister Nirmala Sitharaman, in a meeting with heads of Public Sector Banks (PSBs) on Friday, urged them to leverage the Reserve Bank of India’s recent  50 basis points rate cut  to accelerate lending towards the productive sectors of the economy. Sources reported that the Finance Minister asked PSBs to maintain the profitability momentum in  FY26 , building on their strong performance last year. The cumulative net profit of 12 PSBs surged to  Rs 1.78 lakh crore in FY25 , marking a 26% rise compared to the previous fiscal. In absolute terms, this meant a profit increase of about  Rs 37,100 crore . Sitharaman also emphasised the importance of financial inclusion, directing banks to onboard more customers under government schemes to ensure broader credit outreach. On  June 6 , the RBI’s monetary policy committee, led by Governor Sanjay Malhotra, cut the benchmark repo rate by  50 basis points to 5.5% . The minister highlighted that PSBs sh...
Post a Comment
Read more

RBI's New Guidelines for P2P Lending Platforms: Enhanced Clarity and Benefits for Lenders and Borrowers

Recent changes by the Reserve Bank of India (RBI) to peer-to-peer (P2P) lending regulations are set to bring improved transparency and clarity to the sector, despite initial concerns about tighter restrictions. Industry experts view these amendments positively, suggesting they will ultimately benefit both lenders and borrowers. The RBI's revised guidelines aim to address various issues in the P2P lending industry by specifying what non-banking finance companies (NBFCs) involved in P2P lending are prohibited from doing, particularly concerning credit risk assumption. These updates are intended to eliminate irregular practices and enhance the overall transparency of P2P platforms. Understanding P2P Lending P2P lending allows individuals to borrow and lend money through RBI-regulated NBFC platforms that match lenders with borrowers. These platforms act as intermediaries, managing transactions and repayments for a fee. P2P loans are often used for short-term needs such as medical emerg...
Post a Comment
Read more