Budget 2018: Finance Minister Arun Jaitley will address the boards of the Reserve Bank and markets regulator Sebi tomorrow, highlighting various financial sector reforms announced in the Union Budget 2018-19. He may also take up the issue of additional Rs 13,000 crore dividend to be transfered by RBI to the government. The customary post-budget meeting is taking place this time against the backdrop of hardening bond yield and apprehensions that interest rates may rise. Besides, the government has introduced Long Term Capital Gains Tax on equities sending stock market in tizzy at a time when oil prices have been on the rise globally and stock markets have tumbled across the world. That apart, it has decided to deviate slightly from its fiscal deficit target, raising it to 3.5 per cent of the GDP for 2017-18 from 3.2 per cent pegged earlier.
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An official said the Sebi board meeting on February 10, first after presentation of the Union Budget for 2018-19, would discuss various budget proposals as well as other issues. Among the various budget proposals pertaining to securities market, the board is expected to deliberate upon the suggestion to mandate listed companies to meet at least one-fourth of their funding needs through bonds. According to the official, the regulator would look at asking 100 most valued companies in terms of market capitalisation to meet certain portion of their funding requirement by way of bonds. “Sebi will also consider mandating, beginning with large corporates, to meet about one-fourth of their financing needs from the bond market,” Jaitley had said in his budget speech.
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The Finance Bill 2018 has also proposed amendments to the Securities and Exchange Board of India Act, Securities Contracts (Regulation) Act and Depositories Act. As per one of the proposals, an investment adviser or a research analyst would be liable for a fine of up to Rs 1 crore in case of violating the regulations. Similar, provisions have been proposed for violations by persons in respect of alternative investment funds, infrastructure investment trusts and real estate investment trusts. Besides, the government has proposed a fine ranging from Rs 5 crore to Rs 25 crore for stock exchanges, clearing corporations and depositories that fail to carry out their business in accordance with regulations.
The amount could also be “three times the amount of gains made out of such failure, whichever is higher”. According to the senior official, recommendations of the Uday Kotak panel on corporate governance practices at listed companies are also likely to be taken up. The panel has recommended limiting chairmanship to non-executive directors, appointing at least one woman as independent director and increasing the number of board meetings to five in a year.