Evolution of concept of related parties and related party transactions
– Team Vinod Kothari and Company | corplaw@vinodkothari.com Our Resource Centre on Related Party Transactions can be viewed here
Author Archive for: vinod
Entries by Vinod Kothari
Chains of control: Change of control approval keeps NBFCs perplexed, often non-compliant
– Vinod Kothari (vinod@vinodkothari.com) Paragraph 42 of the Master Direction – Reserve Bank of India Non-Banking Financial Company – Scale Based Regulation) Directions, 2023 (‘SBR Directions’), mandates obtaining prior approval from the RBI for any change in shareholding of 26% or more or any change in management amounting to 30% or more. Before we get […]
RBI proposes major regulatory restrictions on bank NBFCs and HFCs
– Vinod Kothari, finserv@vinodkothari.com Banking regulation is slated to get into a group-wide regulatory framework, embroiling group entities of banks. According to a draft of the proposed regulation circulated on 4th October, 2024,[1] (“Draft Proposal”) NBFCs in the bank group, engaged in lending or housing finance shall be treated as Upper Layer entities, and additionally, […]
Demand and call loans: Economics and regulatory considerations
Vinod Kothari | finserv@vinodkothari.com From lenders’ perspective, demand and call loans seem to be as liquid as money in a bank fixed deposit, and yet an option to earn substantially higher interest rates. The practice of demand loans exists in the financial marketplace; at the same time, it is often commonplace in the case of […]
Expected credit losses on loans: Guide for NBFCs
– Vinod Kothari | finserv@vinodkothari.com One of the most important, and often the most complicated issues in applying IndAS 109 to financial assets, particularly loan portfolios, is to the computation of expected credit losses (ECL). The following points need to be noted about ECL computation:
Choppy landing for soft lending: Regulatory concerns on quality of lending
– Vinod Kothari, finserv@vinodkothari.com Some of the RBI’s recent stringent actions, with stop-business directions, raise an alarm amongst financial sector entities. Are these concerns limited to a particular type of lending, or can they lead to any general observations on the quality of lending? One shouldn’t be tunnel-visioned and believe that these regulatory objections are […]
NBFC Regulation turned sixty
Vinod Kothari, finserv@vinodkothari.com Not sure if any cake was cut[1], but NBFC regulation turned 60, on 1st Feb., 2024. It was on 1st Feb., 1964 that the insertion of Chapter IIIB in the RBI Act was made effective. This is the chapter that gave the RBI statutory powers to register and regulate NBFCs. 1964: Insertion […]
AIFs ail SEBI: Cannot be used for regulatory breach
Vinod Kothari | corplaw@vinodkothari.com The alternative investment management industry in India works in the form alternative investment funds (AIFs), a SEBI-regulated vehicle. Most of the PE, VC funds, and hedge funds in India work in this mode. AIFs have recently been at the receiving end of regulatory flak. RBI had expressed concerns on use of […]
Sustainability linked derivatives: An instrument with a potential
– Vinod Kothari, vinod@vinodkothari.com Sustainability-linked loans and bonds have been surging globally. While there has been a dip in the recent periods (Q3 and Q4 of 2023) owing to tightening of regulatory conditions, the global volumes of sustainability-linked loans stood at around $ 400 billion[1]. However, there is another instrument – a derivative, which also […]
Group Insolvency: Relevance of Substantive Consolidation in Indian Context
– Vinod Kothari and Sikha Bansal[1] | resolution@vinodkothari.com Introduction Insolvency law has always to be aligned to economic realities; when it comes to solving the problem of corporate insolvencies, an economy cannot disregard the prevalent corporate structures. The design which corporates adopt to conduct business must, in fact, be one of the most critical factors […]