Dhaak : Emperor's New Clothes | राजा के नए कपड़े

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Tonight we bring you another Dadima | दादीमाँ story. This time on popular request we chose a story that our corporate listeners would also relate to. Emperor's New Clothes is about Maharaja Batuk Lal Maurya of Shundi who was really fond of new clothes. Its his story narrated by your favorite host Tushar Sen:

https://instagram.com/tusharsarojsen OR http://dhaak.com

Dhaak : The Matrix | मायाजाल

Listen here: http://dhaak.com/dhaak-podcast-the-matrix.php?icode=2

The matrix as we know it is all around us, we live in it and think it to be real. You have to understand. Most people are not ready to be unplugged. And many of them are so hopelessly dependent on the system that they will fight to protect it. The system is ones ego and ones ego shape our consciousness. They are fundamentally one and the same. To become unplugged implies shattering your illusive identity, the story about you and the world around you. It implies becoming face to face with reality, and thus acknowledge all the negative and positive aspects of the world around you, not only those fit to your story. Let's understand maya tonight dear listeners, my story will help you understand better. So happy listening and do share your views with me onhttps://instagram.com/tusharsarojsen ORhttp://dhaak.com‎

RBI Norms on banks' IPO funding

The Reserve Bank of India’s (RBI) move to curb banks’ exposure to the capital markets has come as a big jolt to banks and non-banking finance companies (NBFCs) extending loans against security of shares for subscribing to initial public offers (IPOs).
Foreign banks and NBFCs, who have traditionally been the most active players in financing IPOs are expected to be badly hit, with RBI restricting banks’ capacity to extend loans against shares to a single borrower for subscribing to IPOs to Rs 10 lakh as against Rs 20 lakh permitted earlier. Sundeep Bhandari, regional head, global markets, South Asia, Standard Chartered Bank said, “We have experienced an increase in corporate borrowers availing loans against shares for funding their overseas expansion plans. If the cap on the loans against shares is extended to corporates, our business would be affected.”


The cap of 40% of the networth on the banks’ consolidated exposure to the capital markets is expected to curtail the business expansion plans for many banks, which have been aggressively extending funds to consumers through their subsidiaries. "These guidelines are expected to address the loopholes of the system, which has been exploited by many banks routing funds to sensitive sectors through its subsidiaries," said a senior bank official.
Nicholas Winsor, head personal financial services, HSBC said, “The proposed cap on IPO funding is aimed at controlling the overheating of the domestic IPO market. We have been active in the business of collecting the subscription for IPOs, rather than actual funding of public offers.” Banks have been asked to fix intra-day limits for brokers, while monitoring their limits on an ongoing basis. Broking houses and large corporate houses have been excessively relying on banks and NBFCs for financing equity linked instruments. Fixing of intra-day limits is expected to stifle broking firms’ access to bank funds.
V Vaidyanathan, retail head, ICICI Bank said, “IPO financing constitutes a small fraction of our total banking business. Hence, the impact of the draft guidelines on banks’ exposure to capital markets would not be very huge to our total banking business.”
ICICI Bank has the highest absolute exposure to the capital markets, with its total capital market exposure pegged at Rs 2,819 crore as on March 31, 2005. RBI has also stipulated a uniform margin of 50% on all financing of IPOs/issue of guarantees for capital market operations, which would in turn impact margin financing in the stock markets.
Meanwhile, the public sector banks who have been conservative players in capital market exposure, seem to be unruffled by the revised guidelines of capital market exposure. However, the tightening measures of RBI and a series of cases of benami accounts have compelled banks to revisit their internal controls for prudent risk management.

Tougher Norms for IPO Funding

Financing of initial public offerings by banks could be hit severely from 2007. The Reserve Bank of India on
Friday said a single investor can borrow only up to Rs 10 lakh from the entire banking industry to invest in IPOs.

This is against the Rs 20 lakh limit that individual banks could offer to a single investor.

Loans to any single borrower from the banking system against security of shares, convertible bonds, convertible debentures, equity-mutual funds and PSU bonds should not exceed Rs 10 lakh for subscribing to IPOs, RBI said in its draft guidelines for bank's capital market exposure.

At present the IPO market is showing hectic activity with at least two issues lined up each week. Market players, who prefer to make some quick gains by investing in IPOs through the financing route, stay invested in at least five IPOs at any point of time since it takes at least 15 days after the close of offers for the allotment of shares or refund orders to come in.

The new guidelines are expected to affect these speculators, but not so much the retail investors, market players said.

The central bank has also said that for a single investor, loan against shares held in physical and demat forms should not exceed Rs 10 lakh and Rs 20 lakh, respectively.

To ensure compliance, it has also asked banks to obtain a declaration from each borrower detailing the loans and advances against shares and other securities from other banks.

Draft guidelines said banks would have the leeway to use up to 40% of their net worth for capital market related exposures.

The new capital market exposure has some positives, specially for private sector banks like ICICI Bank, Kotak Mahindra Bank and HDFC Bank, as investments in own subsidiaries, preference shares, joint ventures and regional rural banks, and unlisted entities like depositories, commodities bourses, and the National Stock Exchange will not come under direct exposure.

Additionally, banks direct investments into shares and equity-related instruments, IPO financing, guarantee for stock brokers, margin financing and their investments in venture funds are among those which will be treated as direct exposure.

With this framework, the central bank has also allowed each bank to formulate policies to restrict intra-day exposure to capital market.

The rule also states that banks having sound internal controls and robust risk management can approach RBI for higher limits with details of exposure and justification for such higher limits.