Things we are reading today - June 07th, 2024

SEBI issued a warning to ICICI Bank following complaints from shareholders about inappropriate outreach efforts regarding the delisting of ICICI Securities. Shareholders reported receiving calls from the bank urging them to vote in favor of the delisting, with some calls even asking for voting screenshots.

SEBI found this to be a conflict of interest, as the bank, being an interested party, was not providing a balanced view. ICICI Bank acknowledged the issue in an exchange filing and was instructed by SEBI to improve compliance and report actions taken to its board and SEBI.

SEBI has expanded the definition of promoters for IPO-bound companies. Founders holding 10% collectively, and serving as key managerial personnel or directors, are now classified as promoters, even if individual holdings are low.

Immediate relatives on the board or in management, or holding 10% or more, will also be classified as promoters. This includes extended relatives, complicating declassification as public shareholders. The new rules have sparked concern due to potential overreach and the increased obligations for individuals with limited business involvement.

The subjective definition of promoter has led to past court rulings, highlighting the complexity of determining control.

SEBI has introduced a framework imposing financial penalties on market infrastructure institutions (MIIs) for surveillance lapses, effective July 1. Penalties range from ₹1 lakh to ₹1 crore per lapse, depending on the institution’s annual revenue and the number of instances.

The framework aims to deter market manipulation and abusive trading, ensuring market integrity. Surveillance lapses include inadequate or delayed reporting and implementation failures. The penalties will not apply to instances with market-wide impact or significant investor losses.

In light of the Reserve Bank of India’s caution against excessive unsecured lending and fintech-sourced borrowers without proper checks, mid-sized NBFCs like DMI Finance, Vivriti Capital, and InCred Capital face a balancing act. These NBFCs have significantly grown their unsecured lending through fintech partnerships post-COVID.

Notable acquisitions include Ugro Capital’s purchase of MyShubhLife, DMI Finance’s acquisition of ZestMoney, and InCred Capital’s takeover of Qbera. These deals, leveraging technology, have reduced operational costs, enhanced customer experience, and improved customer insights.

Now, these NBFCs must see if they can replicate this growth in secured lending.

The Reserve Bank of India (RBI) has set up a committee with industry participation to help build a digital public infrastructure platform specialised to tackle the issue of frauds.
The committee will also suggest means through which the platform will check frauds in the digital payments ecosystem and suggest fraud mitigation measures

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@Shruthi I think it’d be much more useful if these articles are broken up into separate posts so that discussion on individual items can happen. Not sure if ‘Things we are reading today’ is the best way to represent these / drive users to read these.

Just a suggestion.

Hi, you can carry out the discussion on the same thread :slight_smile: