360 Degree View- Watch around
360 Degree View January 2024
1. Success of Insolvency & Bankruptcy Code (IBC)
Record of 273 Stressed Cases resolved under IBC in the year 2023. As per the Insolvency and Bankruptcy Board of India (IBBI) Data about ₹ 3.2 Lakh Crore were realised by the creditors under IBC.
The resolution of Srei Equipment Finance Limited (“SEFL”) & Srei Infrastructure Finance Limited (“SIFL”) in September 2023 alone fetched ₹ 13,785 Crore against the admitted claim of ₹ 33,050 Crore.
There is a resolution before the admission of the case under IBC due to the threat as defaulting promoters run the risk of losing control of companies once the IBC matter is admitted by the National Company Law Tribunal (NCLT). As per IBBI Data 27,514 Insolvency Cases for 9.74 Lakh Crore were settled before the case was admitted. This suggests credit discipline among the borrowers.
2. Conversation with Chairperson Mr. Ajay Pandey- National Financial Reporting Authority (NFRA)
Mr. Ajay Pandey, Chairperson of NFRA said in a conversation that NFRA would check if Audit Firms have kept their words in the follow-on inspection this year. NFRA will shortlist another 7 to 8 Firms for an annual Inspection this year.
He clarified that the purpose of Inspection is to advise Auditors on what is unacceptable and where there is scope for improvement. He said, “When we inspect the firm again at a later date, there will be an evaluation of the remedial action taken by them”.
NFRA Head also mentioned that new professional skill sets are required given the complex working and economic environment with Informational Technology (IT) driven businesses. The Auditors to be cautious about accepting Non-Audit Services to audit clients or their group companies. There needs to be an absolute non-conflict of interest and discharge of duties of Audit flawlessly.
He added that for the Auditor to carry out groundwork and Artificial Intelligence (AI) can supplement with the use of Professional skepticism. If there are some mistakes in the audit due to information given by AI, then it cannot be used as an excuse.
In the recent past, NFRA said that resignation by the Auditor is not the escape route to absolve him from the critical public interest obligation of reporting frauds in or by corporates. He should report to the Ministry of Corporate Affairs as mandated in the Law.
3. Education – “For Profit “Entities
Formal Education in India is structured through either Trusts or the Societies which are entities “Not for profit”.
However, recently Government of India (GoI) issued the “University Grants Commission (Setting up and Operation of Campuses of Foreign Higher Educational Institutions in India) Regulations 2023”. This Regulation 2023 allows foreign universities to set up campuses with complete autonomy to decide their admission processes and fee structure. To receive and use any donation funds from any foreign sources will be with prior approval of GoI and compliance with the Foreign Exchange Management Act,1999 (FEMA)and Foreign Contribution (Regulation) Act, 2010 (FCRA).
This Regulations 2023 aim to establish a robust framework for entry and the operations of Foreign Higher Education Institutions (FHEI) in India.
With the entry of FHEI entering India and setting up campuses in India, it will improve quality education, increase options for students and stop the brain drain from India.
GoI has authorized the University Grant Commission (UGC) as the sole authority for single-window approval for FHEI. In the Union Budget 2022-23, GoI announced a proposal to have foreign universities operate from GIFT City, free from domestic regulations. In the IFSCA (Setting up and Operations of International Branch Campuses and Offshore Education Centres) Regulations 2002. GoI has clarified that for-profit Foreign Universities may repatriate money.
4. Mental Health Disorders & Therapies
Mental Health is critically important to everyone, everywhere. For decades Mental Health has been one of the most neglected areas of public health globally.
Fortunately, Gen Z does not consider mental health issues and seeking of professional help as taboo. One of the data reveals that people below the age of 35 years are among the highest seeking neuropsychiatric therapies. India’s youth is seeking such therapies not for only mental diseases or disorders but to perform well in life’s different aspects.
According to Pharmarack, a Pharmaceutical Market Research Firm, sales of Neuro-Psychiatry medicines used to treat Neurology and Central Nervous System (CNS) disorders have surged to ₹ 11,774 Crore in December 2023 from ₹ 8,479 Crore in 2019.
Many Physicians have reported increased footfalls and patients with mental disorders. The trigger may be due to lack of social contact, loss of near and dear ones, periods of isolation, etc.
The World Health Organization’s (WHO) comprehensive Mental Health Action Plan (2013-2030) commits all countries to try and make a vision ( mental health is valued, promoted and protected) a reality.
The WHO Report points to three key paths to transformation:
- Deepen the valueand commitment we give to mental health as a basic human right.
- Reshape the environmentthat influences mental health in ways that reduce risks.
- Strengthen mental healthcare through a community-based network of accessible, affordable, and quality services
Government, NGOs, Academia, Social Workers, Employers, and other Civil Society Stakeholders play key roles and advocate for the rights of people with mental health conditions and support their inclusion in the community
5. Ease of Living in India -Rights of Commuters as Consumers
On January 14, 2024, Indigo flight 6E2195 from Goa to Delhi was diverted to Mumbai. Passengers on this flight were found having food on the tarmac at Mumbai Airport. The Directorate General of Civil Aviation (DGCA) found the response from Indigo & Mumbai International Airport Authority Limited (MIAL) unsatisfactory. The Bureau of Civil Aviation Security slapped a penalty of ₹ 1.25 Crore and ₹ 60 Lakh on Indigo & MIAL respectively.
In a survey conducted by Tummoc, a Patented Public Transit App, 28 % of commuters complain about the public transport infrastructure being unreliable in timing, including delays and irregular schedules.
Consumer Protection Act, 2019 takes care of the rights of any Consumer as the said Act defines a Consumer, as a person who hires or avails services for consideration and includes any beneficiary of such services.
When the Nation is marching towards a 5 trillion-dollar economy by 2028, can we demand Ease of Living in India?
6. Ease of Doing Business: Disclosure Norms—Penalties to Fines
SEBI in July 2023 mandated disclosures of all penalties (disregard of materiality) imposed on the companies to the Stock Exchange, irrespective of the amount. Prior to this amendment, the companies were allowed to use their discretion as per Materiality Guidelines to disclose such events and information.
The first instance of such disclosure which was viral on social media was of Sapphire Foods, which operates KFC in India, that had disclosed to the Stock Exchange a fine of ₹10,000 imposed by Dehradun’s Municipal Council for “non-availability of dust-bin” outside one of its stores in the city. Such penalties had no material impact on the operations of the Company.
Now SEBI is looking at removing unnecessary disclosure to enable “Ease of Doing Business” for companies. One needs to take a balanced approach, as disclosures of material events are important for Good Governance, however, an overload of information would not contribute to any step for protecting the rights of the stakeholders.