Sebi exempts 3 PSBs from open offer

The Securities and Exchange Board of India (Sebi) on Tuesday exempted the Centre from the takeover code obligations for its investment in Dena Bank, Bank of India and Corporation Bank.

The Central government plans to infuse Rs 407 crore in Dena Bank, Rs 2,455 crore in Bank of India and Rs 857 crore in Corporation Bank. The infusion of capital, part of the government’s ‘Indradhanush’ initiative, would have triggered an open offer as the government’s stake in these banks would have increased by more than five per cent.

In Dena Bank, the government’s stake is likely to increase 5.25 per cent - from 59.75 per cent to 65 per cent. In Bank of India, the government’s shareholding might raise from 64.43 per cent to 70.13 cent - an increase of 5.7 per cent. For Corporation Bank, the stake increase could be 5.78 per cent to 69.11 per cent.

According to Sebi norms, when entities that hold 25 per cent or more equity in a company acquire an additional five per cent or more, they have to make an open offer to the public shareholders of the company.

In this case, Sebi has given the exemption on the ground this capital infusion is part of the government’s ‘Indradhanush’ plan and would help the banks meet the growing requirement of funds for expanding the business and to comply with Basel-III requirements on capital adequacy.

“Capital adequacy of the bank is a requirement to protect its small customers as well as the public,” said Sebi in the order.

Registration open for commodity brokers

Sebi said commodity-specific businesses would also be allowed to become members of a commodity exchange.

After it had absorbed the erstwhile Forward Markets Commission's functions, the market was awaiting clarity on whether trading and business houses were eligible to apply for Sebi registration.

In a set of frequently asked questions it issued on Tuesday, Sebi said, “A member of a commodity derivatives exchange can do business in goods related to the underlying (product) and also do incidental to or consequential to trades in commodity derivatives.”

This means, for instance, that gold jewellers may obtain Sebi registration, if in compliance with the exchange bye-laws and the regulator's requirements.

“This is a significant clarification, as there was apprehension among brokers that those having businesses other than commodity derivatives might not be allowed to become members of exchanges under Sebi’s regulations,” said P K Singhal, joint managing director, Multi Commodity Exchange.

Another important clarification was that registration applications' processing would be decentralised. Trading members of commodity markets may obtain registration at regional Sebi offices.

The registration window for commodity brokers has been kept open for three months.

Sebi reiterated that the net worth requirement of Rs 1 crore and registration fee of Rs 50 lakh would need compliance after a year.