Capital Market | money Laundering

Side Pocketing - Allows MF to seggregate bad portfolio in separate portfolio. 

After IL&FS crisis SEBI has put up some rule which inclue to separate the Good asset from Bad asset. If a Debt instument is downgraded then MF is allowed to set up a Side pocket and will have same units of MF and user should not be allowed to Subscribe or redeem the MF.

• Thereafter MF have to list the units on Stock exchange to allow the user to either sell or hold the units and avoid risk.

* RBI has allowed eligible borrowers to raise ECBs with a maturity period of 10 years from recognised lenders, except foreign branches and overseas subsidiaries of Indian banks for capital Expenditure n corporate expenditure. ECB is also allowed for min 7 year term for capital expenditure.

* Money laundering is way of converting money made from terrorism, drug trafficking, prostitution racket etc to legitimate money.

Recently prevention of money laundering act 2002, was changed Which empowers enforcement directorate to handle money laundering cases effectively.

Now money laundering is made stand alone offence , non bailable cognizable offence, n expanding the ambit of proceeds of money laundering (directly indirectly asset created by laundered money).

Enforcement directorate works under dept of revenue,min of fin enforces Foreign exchange mgt act 1999 & Prevention of anti money laundering act 2002.

* Corporate affairs min has removed requirement of keeping 25% to 10% of debenture redemption reserve of the value of outstanding debenture issued by Listed companies, NBFC and HFC.

Debentures are debt instruments used to raise capital from the general public, usually backed by the integrity and the creditworthiness of the issuer.