NBFCs' bourse activity worries RBI

The Modesty Depository Financial Institution of Republic Of India have told Parliamentarians that it is concerned over the stock marketplace exposure of assorted non-banking fiscal companies (NBFCs) promoted by leading Banks in the country.

At a meeting with the Parliamentary Standing Committee on Finance on February 12, the cardinal depository financial institution said some Banks were circumventing prudential norms for working capital marketplace exposure through these NBFCs.

On February 12, the Committee had met functionaries of the Modesty Depository Financial Institution of Republic Of Republic Of India and the State Depository Financial Institution of India, besides representatives of the investor and agent communities.

A member of the Standing Committee, who attended the meeting, said the run batted in officials, when questioned about the engagement of Banks in the stock market, told them that the cardinal depository financial institution was "worried".

Another Committee member said the run batted in had pointed out that most Banks were within the bounds put for working capital marketplace exposure, but said some may have got breached the norms. "The run batted in told us it is monitoring the state of affairs keenly," he said.

Earlier, on January 25, Business Standard had reported that the run batted in had sought information from the NBFCs on their investing and funding activities in the working capital marketplaces over the last two months.

Estimates nail down NBFC exposure to the working working capital marketplace at Rs 70,000 crore and it is believed that most NBFCs have got far exceeded the stipulated ceiling on capital marketplace exposure to single physical things or corporate groups. Sir Joseph Banks have got a bounds of 5 per cent of incremental sedimentations to be deployed in the working capital market, while NBFCs are not subject to an overall ceiling.

Meanwhile, the Committee, which met here again today, posed a figure of inquiries to senior finance ministry functionaries on the recent volatility in the stock market. Cutting across political party lines, the mononuclear phagocyte system demanded greater transparence and answerability in the working capital market.

"There is absolutely no transparence in the rating and pricing chemical mechanism of initial populace offerings (IPOs). The evaluation companies are paid by the initial public offering companies to make the ratings. We wanted to cognize from the finance ministry how more than transparence can be brought in this process," an military policeman said, adding that there were grounds to believe that large corporate participants were trying to flex regulations and pull strings the stock market.

"We desire the stock marketplace to go more than than crystalline and there should be more answerability in the stock market. Our study will take to supply suggestions in this regard," said Rupchand Pal, member of the Committee and main whip of the CPI(M) in the Lok Sabha.

Committee member Degree Centigrade Ramachandraiah of the Telegu Desam Party have written to Prime Curate Manmohan Singh today seeking contiguous policy intercession to forestall the Indian working capital marketplace from slipping into a meltdown.

"The larger inquiry is about the function of the stock marketplace regulator. Are it not prudent that Securities and Exchange Board of Republic Of India (Sebi) be entrusted with the duty to inform investors about the pricing of public issues," he said.

Committee members also asked the ministry functionaries whether the recent volatility in the stock marketplace was on business relationship of the issue of foreign institutional investors (FIIs).

The adjacent meeting of the commission is scheduled for February 28. The commission have asked the ministry to submit written answers to the queries, based on which it will set up its report.

The Standing Committee, which is headed by BJP military policeman Ananth Kumar, also queried functionaries about some of the proposals mooted by Sebi that are yet to acquire clearance from the corporate personal business ministry.

"There was a proposal to make investors protection monetary fund but the corporate personal business ministry is sitting on it. We wanted to cognize from the authorities what happened to these proposals," a member of the commission said.