Thursday, September 17, 1998
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B U S I N E S S | Thursday, September 17, 1998 |
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spotlight today's calendar |
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RBI chief hints at tough
regulatory mechanism Punjab
seeks more funds |
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Govt allows duty free
import of electronic hardware inputs SPV
not only route: Kelkar |
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‘Can’t salute
dollar’
LML
dumps Italian bike GM
ups stake in Suzuki UNCTAD
forecasts upturn in economy 100
m poor in rich nations: UN report Bank
launches green cards for farmers |
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RBI chief hints at tough
regulatory NEW DELHI, Sept 16 — The Governor of Reserve Bank of India (RBI), Dr Bimal Jalan, today hinted at moving towards a tough regime of regulatory and prudential banking norms. “The regulatory mechanism is going to become sharper even as banks are given more autonomy”, Dr Jalan said while speaking at a conference on international banking organised by the Indian Banks’ Association (IBA) in the capital today. Stating that the India was a “financially conservative nation” Dr Jalan said that “I would like to see that Indian banking standards are better than the rest”. Underlining the need for greater transparency and accountability, the RBI Governor said that both the government and the RBI would like to maintain the strictest norms in this respect. Agreeing that issue of non-performing assets (NPA) was not a management problem but a structural one, Dr Jalan said that “we should avoid any hype about the problem”. “But it is better to think of it as a bigger problem than a smaller one”, he observed. Referring to mergers and acquisitions, Dr Jalan said that it was more of a structural problem and over a period of time it would be prudent for individual banks decide and “not for the RBI or the government to mandate”. Elaborating on the South
East Asian crisis, Dr Jalan said that unlike previous
crises, the focus this time has been on the financial
sector rather than on the real sector. The general
perception is that it is the banking mechanism, which has
failed the system, he said. |
Govt allows duty free import of
NEW DELHI, Sept 16 (PTI) — The government today announced a special scheme allowing duty free import of electronic hardware inputs and extended the period for fulfilling export obligations up to March 31 next. Announcing these measures at the Economic Editors’ Conference here, Commerce Minister Ramakrishna Hegde said the government had decided to confer star trading house status on large companies irrespective of their export performance. This would enable them to get special benefits. Simultaneously, it has also been decided to allow export, trading, star and super star trading houses to retain their status even if they failed to reach the targeted 20 per cent growth this financial year. Imports of inputs for computer hardware would be on the basis of self-declaration by exporters and it would enable the electronics hardware sector to realise its full export potential. Exporters were free to import any integrated circuit, component, sub-assemblies, parts or accessories for export production. Accounts for such input imports could be produced at the year-end to the officers nominated by the Department of Electronics, he said. Referring to the one-time extension given by the government for fulfilling export obligation under the Export Promotion Capital Goods (EPCG) scheme, Hegde said the decision to allow further extension till March 31 was taken in deference to representations received by the government. The obligations would have to be met on similar terms that were applicable for earlier extensions. On allowing trading houses to retain their status this year despite fears of not achieving the targeted growth, the Minister said this was due to the difficult export environment. The decision is in tune with fears expressed by Hegde earlier that India might not achieve a 20 per cent export growth. The criteria had been relaxed only as a special case this year. Regarding the decision to confer star and super star trading house status to large companies, he said any manufacturing company or industrial house with an annual manufacturing turnover of Rs 300 crore and Rs 1,000 crore would be eligible for star and super star trading house status, respectively. The status would be
conferred on simple application accompanied by a balance
sheet and on signing a memorandum of understanding (MoU)
with the Directorate General of Foreign Trade, he said. |
‘Can’t salute dollar’ NEW DELHI, Sept 16 (PTI) — India should make efforts to contain dominance of the dollar in world trade and explore the possibility of floating a common currency in the SAARC region, Commerce Minister Ramakrishna Hegde said today. “If the present monopoly of America continues, there’ll be economic imperialism. We can’t submit to or salute the dollar”, Hegde said at the Economic Editors’ Conference here. European countries will
switch over to a common currency “euro” from
next year and that will be a welcome step towards
reducing the dependence on the dollar, he said. |
SPV not only route: Kelkar NEW DELHI, Sept 16 (PTI) — Finance Secretary Vijay Kelkar today said the creation of a special purpose vehicle (SPV) for the disinvestment of public sector undertakings (PSUs) would not bar any PSU from taking the strategic sale route. “SPV is not the only way of doing it (PSU disinvestment). The strategy can be different in different PSUs. It is only a possible way of doing it,” he told the Economic Editors Conference here. The Finance Secretary said the essential purpose of the SPV was to avoid distress sales of PSU shares to meet the budgetary targets. Moreover, privatising PSUs by transferring government shares, which are over and above 49 per cent would increase the value of PSU shares, he said. The proposal would be taken to the group of ministers after getting the comments of ministries and the disinvestment commission on the creation of SPV, he added. Chief Economic Adviser in the Finance Ministry Shankar Acharya said the RBI and the SBI were working out modalities for transferring a part of the proceeds from the Resurgent India Bonds (RIBs) to infrastructure funding institutions. Expenditure Secretary E.A.S. Sarma said the government was evolving various mechanisms to curtail its expenditure, including independent evaluation of some social sector projects. On opening up of the
insurance sector, the Finance Secretary said the Cabinet
has entrusted a group of ministers to look into the
issue, including private investment in the sector. |
Punjab seeks more funds NEW DELHI, Sept 16 — The Punjab Government has urged the 11th Finance Commission to increase allocations for urban infrastructure. The Punjab Minister for Local Government, Labour and Employment, Mr Balramji Dass Tandon, told a conference of State Ministers in charge of municipal administration convened by the Commission here today that by the year 2001, about half of the population of the country was expected to be living in urban areas putting immense pressure on the municipalities. In 1991 Punjab was the fifth most urbanised state with about 30 per cent of its population living in urban areas. Rapid growth of the towns in Punjab has given rise to a host of problems. “The Gap between the available and the required core civic services like water supply, sewerage and drainage, sanitation, roads and streets and street-lighting is widening. According to the report of the First Punjab Finance Commission, the State would require Rs 3,479 crore up to the year 2000-2001 for providing water supply, sewerage, roads and streets, sanitation and street-lighting. Due to the inflation, achieving the targets would require roughly Rs 5,800 crore in years 2000-2005. The Minister also took up
the issue of exemption from property tax for the
properties of the Central ministries and undertakings.
This, he said, deprives the urban local bodies of
substantial income by way of property tax. He urged the
commission to recommend the withdrawal of this exemption
through suitable amendment to the Constitution. |
Car financing goes out of gear LUDHIANA: The car finance industry in this city is an astounding Rs 15 crore to Rs 20 crore with players like Bank of America, ANZ Grindlays, Citibank, Maruti Countrywide, Apple Finance, Onida Finance, Escorts, 20th Century — all having major stakes in the market. With so many players in the market, the rates of interest charged by different companies vary from 18 per cent to 23 per cent on reducing balance although it can be even lower for selective clients. Most finance companies offer finance cars up to 90 per cent and the period of repayment of instalments is spread over a minimum of one and maximum of three years. However, customers need to be wary of those companies that charge interest on flat rate with a smaller instalment to be paid every month instead of calculating interest on reducing balance which becomes cheaper in the end. Although people going in for premium or luxury cars (cars costing more than Rs 3 lakhs) like Maruti Esteem, Cielo, Opel Astra, Honda City, Zen etc form the major segment of the customers, there is also an increase in the number of customers getting a smaller car financed. However, the financiers deny that there is a boom in the business. “The finance industry has also not come out unscathed from the general recession affecting the industry”, says Mr Navneet Sharma, branch manager of 20th Century Financial Corporation. With almost a 1,000 cars sold in the city per month, financiers claim that 70 per cent of the cars sold are financed. As the players in the market have increased and vie with each other over the share in market. It has also brought to light many defaulters. Last month, Kotak Mahindra Primus Limited lodged a complaint with the economic offences wing of the police against six persons for selling off cars financed by the company on hire-purchase agreement without paying the instalments and supplying forged income tax and proofs of residence. Says Mr G.R. Bansal, Manager of Escorts Finance, “Because of stiff competition, the companies fall back on their verification system, which results in increase in defaulters”. Financiers are also plagued with the problem of defaulters who are unable to pay back their monthly instalments. The finance company left with no other option repossesses the vehicle in case the default continues for a longer time. Interestingly, the companies make use of musclemen, who after giving intimation to the police, go and get the possession of the vehicle. “We have to shell out anything between Rs 6000 and Rs 8000 for a single repossession. And it is perfectly legal as the car is still in the name of the finance company”, asserts a manager in a finance company. The financiers say the resale of these repossessed vehicles poses another problem as there are not many takers for these. Although these vehicles come very cheap, the risk factor regarding the transaction and the transfer of vehicle in the name of the new owner decreases the cost of the vehicle. To counter the problem of
defaults, the finance companies also exchange data
amongst themselves on certain proclaimed defaulters.
Recently, some finance companies had also submitted a
memorandum regarding the fraud cases being faced by the
leasing and finance companies, but, action is still
awaited, say financiers. |
LML dumps Italian bike NEW DELHI, Sept 16 (PTI) — In an apparent show of defiance against joint venture partner Piaggio, scooter maker LML has dropped plans to launch the Italian company’s Gilera range of bikes in India, company sources said here. Instead, the Kanpur-based company has roped in Korean two-wheeler manufacturer Daelim for its proposed foray into the motor cycles segment. The first bike from this
new technological tie-up between LML and Daelim will be
launched by October next year. |
GM ups stake in Suzuki TOKYO, Sept 16 (UNI) — General Motors Corporation is tripling its stake in Suzuki Motor Corporation (SMC) from the existing 3.3 per cent to 10 per cent. Suzuki’s expertise in the design and manufacture of mini small cars and GM’s expertise in larger passenger cars will be combined for global application. As part of the agreement,
Suzuki, on November 18, will issue 33.6 million new
shares to GM for 1,258 yen ($ 9.36) per share for a total
of 42.27 billion yen ($ 315 million). |
UNCTAD forecasts upturn in economy NEW DELHI, Sept 16 (PTI) — The United Nations Conference on Trade and Development (UNCTAD) has forecast an optimistic outlook for India in 1998 with overall economic growth likely to be higher than the 1997 level of 5 per cent. “Growth in 1998 for South Asia is expected to revert back to the 1996 level with the recovery of Pakistan and India,” UNCTAD said in its Trade and Development Report 1998, released here. However, the report cautioned that without further adjustments in exchange rates, major export sectors such as garments, textiles, plastics and synthetic fibres, which compete with exports from other Asian economies, will be adversely affected during the year. Meanwhile Indonesia today announced it would investigate the wealth of former President Suharto. “The government has set up a team to probe Suharto’s personal wealth and the wealth of those linked to him,” Attorney General Muhammad Ghalib told reporters. Suharto, mostly out of the
public eye since his downfall on may 21, went on local
television just over a week ago to deny accusations he
had stashed a fortune overseas. |
100 m poor in rich nations: UN report THE HAGUE, Sept 16 (PTI) —Shattering the myth that human deprivation and poverty are prevalent in only developing countries, a UN report says that more than 100 million people across rich nations suffer the same fate and an equal number of them are homeless. At least 37 million people
in these countries are unemployed and almost 200 million
have life expectancy below 60 years of age, says the
“Human Development report — 1998” of the
UN Development Programme (UNDP). |
Bank launches green cards for
farmers CHANDIGARH, Sept 16 — Mr B.N. Sharma, General Manager of Allahabad Bank, today launched a green card at its Bihta branch in Ambala district. The green card will help farmers owning five acres or more in getting timely credit. The green card with a credit limit of up to Rs 1 lakh will have a revolving cash credit facility available from any branch of the district with no restriction on the number of withdrawals. As many as 512 green cards were issued to farmers. The scheme will be open in four districts of Haryana. Soon this scheme will be operational in Punjab’s six districts. Mr S.C. Kaushik, Deputy
General Manager of NABARD, launched the first
farmers’ club of the bank. |
McDowell ready to set up distillery in Punjab CHANDIGARH, Sept 16 (TNS) — McDowell and Company Limited is ready to set up a distillery in Punjab if it is allowed to increase liquor prices. This was announced by Mr Vijay Mallya, Chairman of the company, in Chennai yesterday while talking to newspersons after the annual general meeting of the company. Liquor prices have not been raised in Punjab for the past about four years, although the cost of raw materials has been steadily going up, Mr Mallya is reported to have said. McDowell and Company, in which Mallya’s UB group holds 44 per cent stake, regards Punjab as an important market and sells about 25 lakh cases of its products in the state. Tata Finance to pay 40 per cent MUMBAI, Sept 16 (PTI)
— Tata Finance yesterday reported a total income of
Rs 481.31 crore as against Rs 415.42 crore in the
previous 15 month period ending June 30, 1997,
registering an increase of 45 per cent on an annualised
basis. After providing for depreciation of Rs 48.46 crore
(previous period Rs 56 crore) and taxes of Rs 21 crore
(Rs 11 crore previously), the profit for the year was Rs
41 crore as against Rs 49.3 crore in the previous 15
months period. The board, which met to adopt the accounts
for 1997-98, recommended a dividend of 40 per cent as
against 50 per cent for the previous 15 months period. |
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| Ozone NEW DELHI, Sept 16 (PTI) — A regulation on phasing out of ozone depleting substances (ODS) is on the anvil and will be notified soon, Minister of State for Environment and Forests Babau Lal Marandi announced here today. Speaking at a function on the occasion of International Ozone Day, Marandi said the “Ozone Depleting Substances (Regulation) Rule” would be in line with India’s commitment to the Montreal protocol made on September 17, 1992, under which all ODS must be phased out by the year 2010. Tax relief Milk parlour Gestetner Workshop Forex rates Silver rises DSE demat Price index Package |
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