Sebi chairman Ajay Tyagi confirmed that ICICI Bank has sought to settle the matter through consent mechanism, though the markets regulator has not received any formal communication from the bank.
The Securities and Exchange Board of India (Sebi) on Tuesday said that private lender ICICI Bank has expressed "intent informally" for consent plea to settle allegations against its chief executive Chanda Kochhar related to lapses in corporate governance in the Videocon case.
Sebi whole time member Ananta Barua said that ICICI Bank has sought to settle the matter through consent mechanism, though the markets regulator has not received any formal communication from the bank.
Sebi chairman Ajay Tyagi said that some replies have come and the regulator is examining it.
"Not sure about whether they have filed a consent or not ..I believe the bank has informally discussed the consent (route)," he said.
Sebi has earlier issued show cause notice to ICICI Bank, Chanda Kochhar and others after a preliminary probe showed alleged violations of listing disclosure norms. The preliminary probe found Kochhar’s husband having several business dealings with Videocon Group for many years. ICICI Bank has replied to the show cause notice.
ICICI Bank and Kochhar had maintained that there was no regulatory violation by them and that Kochhar was not aware of her husband’s specific business dealings.
Meanwhile, the private lender in a regulatory filing on BSE on Tuesday said, “We have submitted our response to the show cause notice issued by Sebi. We would like to clarify that we have not filed any application for settlement.”
Seeking to put in place a stringent settlement mechanism, the market regulator has also decided to bar wilful defaulters, fugitive economic offenders as well as entities responsible for defaults that have "market-wide impact" from settling proceedings.
Besides, Sebi would not consider any application for settlement which had been rejected earlier for the same alleged default. These are based on recommendations made by the panel, headed by retired Justice A R Dave, that reviewed the existing settlement mechanism in Sebi. According to the regulator, proceedings would not be settled in the "alleged default has a market-wide impact, loss to investors or affects the integrity of the market".
Meanwhile, the markets regulator in its board meeting has decided to cap the total expense ratio for asset management companies (AMCs) in relation to equity mutual fund schemes. For fund houses with equity assets of over Rs 50,000 crore, TER has been capped at 1.05%. Sebi has fixed slabs for mutual fund companies. A fund house with an asset under management of Rs 500 crore can charge TER of 2.25%. It has also capped TER for an exchange-traded fund (ETF) to a maximum of 1%.
The move will result in savings for investors. According to Sebi’s whole-time director Madhabi Puri Buch, investors could save around 10-12% of the total revenue of the mutual fund industry. “Around Rs 1,300-1,500 crore will go back to investors,” she said. The assets under management of the industry have crossed Rs 25 lakh crore, with revenue of around Rs 13,000 crore.
Sebi has also barred fund houses from paying fees to distributors from their books to prevent mis-selling.
According to Tyagi, commissions will come from schemes and not from AMCs. It also barred any upfront commission, as Tyagi said the industry should follow “full trail model”, based on clients’ investments.
The regulator Sebi has also decided to reduce the time to list shares on the stock exchange after initial public offerings to three days from six days to boost fundraising from markets.
Meanwhile, the large listed companies will soon be required to raise at least 25% of their long-term borrowings through corporate bonds, with Sebi board approving a revised regulatory framework. The Sebi board has cleared the framework for enhanced market borrowings by large corporates and it would come into force from April 1, 2019.
Large corporates would have to raise "25% of their incremental borrowings" for a particular year through the bond market, Sebi said.
Under the new framework, companies, other than scheduled commercial banks, that meet certain criteria would be categorised as large corporates. Long-term borrowings are those having a maturity period of more than one year.
(With PTI inputs)
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