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| Tuesday, January 1, 2002, Chandigarh, India   
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GDP growth falls to 5.3 pc during Q2
Norms in insurance sector on cards
SEBI decision to affect Ludhiana exchange
IT industry down but not out |
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From clerk he rose to meteoric heightsMumbai, December 31 “Big Bull” Harshad Mehta, who passed away early today, rose from an insurance clerk to become one of the high profile share brokers till 1992, when the multi-crore securities scam rocked stock exchanges in the country with a number of banks and financial institutions facing the heat.
ICICI Bank centres for money changing
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GDP growth falls to 5.3 pc during Q2
New Delhi, December 31 Gross domestic product figures, estimated by the Central Statistical Organisation (CSO), was pegged at Rs 2.83 lakh crore during July-September 2001-02 from Rs 2.69 lakh crore a year ago at 1993-94 prices, showing a growth rate of 5.3 per cent. The growth though lesser than last year can be largely attributed to a significant growth of 3.4 per cent in agriculture, forestry and fishing, up from a mere 0.5 per cent in the corresponding period last year. Other sectors which performed well in the second quarter this fiscal over the Q2 of 2000-01 were trade, hotels, transport and communication at 6.2 per cent while financing, insurance, real estate and business services grew at 11 per cent. As per the latest estimates on the Index of Industrial Production (IIP) the index of mining, manufacturing and electricity (including gas and water supply) registered growth rates of 0.6 per cent, 2.3 per cent and 4.8 per cent respectively. The decline in mining was particularly sharp this quarter at 0.6 per cent against 3.8 in the same period a year ago. Similarly, manufacturing also registered a growth of 2.3 per cent compared to a healthy 6 per cent in 2000-01. Share of the manufacturing sector stood at 18.7 per cent in the GDP this quarter against 18.3 per cent in the same quarter last fiscal. Being a major part of the total GDP, decline in its growth played an important role in bringing the total growth rate down too. In construction, which is an important component of the infrastructure sector, growth rate more than halved to 4.1 per cent from 8.4 per cent. Even though there was a significant growth in trade, transport and communication segment of 6.2 per cent it was still lesser than 7.3 per cent in the same period last year. In community, social and personal services a reasonable growth of 6.1 per cent was lower than the 9.3 per cent in the same quarter last year. The electricity sector including gas and water supply did show a growth of 4.8 per cent from three per cent in the corresponding period last year. The key indicator of railways, namely the net tonne kilometres showed a growth rate of 2.6 per cent compared to a negative growth of 0.7 per cent in the second quarter of 2000-1. Passenger kilometres of railways have also shown a rise of 13.1 per cent compared to 7.6 per cent rise in the same period last year.
PTI
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Norms in insurance sector on cards
New Delhi, December 31 Although IRDA will shift its headquarters to Hyderabad early next year, it has framed most of the guidelines within a record time of less than 18 months. IRDA also fine-tuned the Old Age Social and Income Security (OASIS) scheme suggested by the Dave Committee and prepared the grounds for pension reforms. In 2002, IRDA will come up with norms as suggested by the International Association of Insurance Supervisors to make the Indian insurance industry sync with the world. As spelt out by Finance Minister Yashwant Sinha, IRDA’s future course of action would be to strengthen the regulatory system, develop a code of good practices, improve corporate governance and financial accountability, ensure high solvency margins of companies, ensure timely and reliable data while strengthening market structure. The reforms would build upon the corner stone already laid down by IRDA. But what were IRDA’s achievements in 2001? While crystal-gazing 2001, one witness IRDA moving away from “licence raj” era and giving approval to Reliance General, HDFC Standard Life, Royal Sundaram, ICICI Prudential Life, ICICI Lombard General, Max New York Life, IFFCO Tokio Marine, Birla Sun Life, SBI Life, OM Kotak Life, Tata AIG (life and non-life), Metlife, Bajaj Allianz (life and non-life) and ING Vysya Life. Reliance Life, Dabur CGU and AMP Sanmar have obtained “in principle” approval while proposals of Sahara Life and ECGC are under consideration. In the pipeline are proposals from the Murugappa Group, PNB and Nabard. Within the next two-three years, the insurance sector is expected to be abuzz with at least 25 companies. So India’s life insurance sector, which was afloat on the strengths of LIC till a year ago, is now dotted with all major names of Indian and global financial world. LIC may claim: “We know India better”. But companies like Prudential ICICI Life, HDFC Standard Life, Max New York Life and ING Vysya have within a short time proved the notion: “We can serve India better”. LIC, however, is unfazed by the competition and boasts a 50 per cent growth in business after the liberalisation. GIC, which has transformed into the Indian Reinsurer, has also spread its wings overseas. It is in the process of tying up with Asian Reinsurer like China Re, to strengthen reinsurance market while eyeing other markets through its tie-up with Russian reinsurer Ingostrak. The trend in the domestic general insurance sector is somewhat different as the new generation insurers are breathing over the shoulders of PSU insurers. The foreign partners demanded a hike in foreign direct investment limit to 49 per cent from present 26 per cent.
PTI
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SEBI decision to affect Ludhiana exchange Ludhiana, December 31 The decision of the SEBI will affect the Ludhiana Stock Exchange as Mr Jaspal Singh, President and Dr Rajiv Kalra, Vice-President are both broker members. The SEBI Board further decided that no SEBI official would be nominated on the board of any stock exchange. The decision of the SEBI board is the outcome of the statement made by the Finance Minister Yashwant Sinha immediately after the shares scam in the month of March in which Ketan Parikh was arrested and the President of the Bombay Stock Exchange had to resign from his post. The scam had rocked the Parliament and the Finance Minister announced that the stock exchanges all over the country would be demutualised and corporatised. The SEBI Board is now busy in working out the administrative and legal modalities for corporatisation and demutualisation of the stock exchanges. Mr Jaspal Singh, President, Ludhiana Stock Exchange when contacted, said that he had not yet received the notification of the SEBI in this regard so far. He, however, said that the Ludhiana Stock Exchange would implement the decision of the SEBI Board. Mr Jaspal Singh said that the Ludhiana Stock Exchange was already on the verge of closure as they were working on the LSE Securities Ltd and business of the Ludhiana Stock Exchange had gone down. Reacting strongly to the decision of the SEBI Board Mr Jaspal Singh said that the stock exchange would work like government organisations with the implementation of the decision. Enquiries shows that the LSE consist of 13 directors out of which six are elected directors, three nominees of the SEBI, three nominees of the public and one executive director who is a full time paid executive of the stock exchange. The Stock Exchange in the country are registered under the Companies Act, 1956 as corporate entities except the Bombay Stock Exchange and Ahmedabad Stock Exchange which are association of persons (AOP). The SEBI Board further decided that the SEBI regulations would be amended in the light of the legal opinion on the judgment of Supreme Court on broker fees as several for as of brokers had made representations to SEBI, seeking clarification on various aspects related to the judgment of the Supreme Court. The SEBI would issue a clarificatory circular on various issues on which it has obtained legal opinion. The brokers s in the cash market, who seek registration for membership of derivatives exchange would be given such registration subject to their payment of atleast 50 per cent of the principal due in cash market (liability arising after October 1 of any financial year) and the balance fees in a period of two years with interest. The brokers in the cash markets would also be give this facility of payment of at least 50 per cent of the principal due in cash market (liability arising after October 1 of any financial year) and the balance fees in a period of two years with interest. SEBI also decided to set up a committee for considering revision of the future fee structure from the one laid down in the RS Bhat Committee report in the light of the present level of broker age fees. Such changes in the fee structures would only be applicable prospectively.
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IT industry down but not out
New Delhi, December 31 The year 2001 could be called a year of “correction” for this much-hyped sector, with analysts scaling down estimates drawn up during the upbeat times, though even at this hard-hitting time growth target did not slip below 30 per cent, a testimony to the fact that the industry continued to withstand a long-drawn economic slowdown. Amid talks of gloom and recession, the two-year old IT Ministry took a giant leap towards convergence. While IT Minister Pramod Mahajan soon after taking over Communications portfolio from Ram Vilas Paswan managed to merge the two high-technology ministries, the Communications Convergence Bill was introduced in Parliament. The move came following the Cabinet clearance of draft Convergence Bill prepared by jurist Fali S Nariman for creating a unified licence and regulatory regime for IT, telecom and broadcasting instead of separate licences required at present. The Bill has since been referred to the Parliamentary Standing Committee and is expected to be passed in the Budget session. In a year of rise and fall of ambitious projects, while the government signed an agreement with the Massachusetts Institute of Technology to set up Media Lab Asia, the much-touted Sankhya Vahini project embroiled with litigations was aborted after Carnegie Mellon University (CMU) pulled out of the joint venture with the Department of Telecom. The burial of the controversial high-speed data network project Sankhya Vahini, which faced strong opposition from the RSS at the time of its inception, had a very demoralising effect on somewhat subdued sentiments of the industry.
PTI
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From clerk he rose to meteoric heights
Mumbai, December 31 Following public outcry, the government set up the Janakiraman Committee to probe the scam, which broke out between April, 1991, and June, 1992. At least 10 commercial banks, including Standard Chartered Bank, the SBI and National Housing Bank, an RBI subsidiary, were hit by the scam. Mehta began his career as a despatch clerk in New India Assurance Company before he transformed the securities market into an active business hub. He then rose to become a stock broker and strove to drive the market to dizzy heights when economic reforms were slowly being unfolded. Mehta, 47, is survived by his wife, two sons and two brothers, Ashwin and Sudhir. Both brothers are also facing trial in scam cases. According to the CBI, he exploited bank receipt instruments to the maximum and used the money derived to speculate the share prices of several blue chip companies. Harshad perfected the art of diverting money to the stock market from bank’s security portfolio by exploiting the loopholes in the system, trade circles say. He took over closed companies, pumped in cash and boosted their shares on the stock market. After the scam, Harshad was arrested by the CBI in several cases registered against him for allegedly cheating the banks and financial institutions to the tune of several crores of rupees. He, however, raised a controversy by addressing a press conference along with his lawyer Ram Jethmalani by displaying two suitcases in which he claimed to have paid Rs 1 crore donation allegedly to then Prime Minister Narasimha Rao. Harshad was facing trial in altogether 28 cases but was so far convicted in only one case involving use of Maruti Udyog Ltd funds to the tune of Rs 30 crore in the stock market. All other cases are still pending. He was sentenced to five years rigorous imprisonment by Justice M.S. Rane in MUL case although harshad pleaded that the money had been returned to mul and the latter saying that it had not lost any amount. He had filed an appeal in the Supreme Court which is still pending. Although Harshad was barred from operating in the market, he offered advice to investors on his website. Harshad had secured bail in all cases registered against him. However, he was recently arrested on fresh charge of misappropriating Rs 250 crore from 27 lakh “missing” shares of 90 blue chip companies. He was placed in judicial custody along with his two brothers, Ashwin and Sudhir, till January 4. Harshad and Sudhir were lodged in Thane jail eight days ago, while ashwin was admitted to J J Hospital soon after his arrest for treatment of cardiac problem. Shares belonging to the Harshad Mehta group had been attached by a special court. However, Harshad and his brothers claimed that 27 lakh shares held by them were “missing” or “stolen” and could not be located. The court ordered a CBI enquiry into the missing shares. The CBI held Harshad and his two brothers responsible for introducing these “missing” shares in the market surreptitiously in benami names to rig share prices. Accordingly, a case was registered against them. The 1991-92 scam had sent shock waves all over the country and saw many heads rolling. In the wake of the scam, Chairman of Uco Bank K.M. Margbandhu was sacked and arrested. Planning Commission member V. Krishnamurthy and SBI Managing Director V. Mahadevan were forced to quit their offices.
PTI
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Better times ahead with euro
Berlin, December 31 “Many will also be a bit wistful. The German mark meant a lot to us. We link the mark with memories of good times in Germany,’’ Schroeder said. “But you can be sure: even better times are head.’’ Many Germans have mixed feelings about the January 1 introduction of euro coins and bills. The Deutsche mark was a symbol of stability and prosperity for West Germany after World War II and for the east since reunification in 1990. “At most, there could be disagreements among bureaucrats, but no longer among the citizens in our European Union. This dream is at hand with the common currency,’’ Schroeder said. Despite reluctance about the euro before he became chancellor in 1998, Schroeder has made a series of upbeat statements about the common currency to rally public enthusiasm, even recalling a 1967 Beatles song in his efforts. “Just like the Beatles, whose records we bought in German marks, sung in their song “Hello Goodbye”: ‘Don’t know why you say goodbye, I say hello’,’’ he wrote in a newspaper article. He said German peacekeeping efforts abroad in places such as Afghanistan and the Balkans were an outgrowth of the European experience. “What we have achieved in the European Union can be a model for other regions of the world. After bloody wars our neighbours have extended the hands of reconciliation, an opening from which
friendship developed,’’ he said in the New Year address.
Reuters
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ICICI Bank centres for money changing Chandigarh, December 31 Of the total 25 centres, the region will have centres in the city, Jalandhar, Ludhiana and Amritsar. “Opening up of forex bureaus will play a major role in our retail strategy, as a value-added service to our PPA clients, high networth individuals, students, etc, besides facilitating encashment of foreign currency notes and travel certificates by foreign tourists visiting India, said Mr Anand Kumar, Senior Vice-President and Regional Head, Retail Banking, ICICI Bank. In it’s recent circular, the RBI advised authorised dealers to expand foreign exchange cash facilities so that it could be provided in a fast and convenient manner. The RBI has also directed banks to open forex bureaus in atleast 25 locations where encashment facilities are inadequate. The apex bank has given various other directions following which ICICI Bank has taken the decision to open these Forex Bureaus. ICICI Bank is likely to start these services by mid January. “Under ICICI Bank bureau de change, we will provide our customers with the best possible rates of foreign currencies round the year. While professional and personalised services are assured, the service enhances the value of clients money by offering American Express and Thomas Cook travellers cheques in different currencies”, said Mr Anand Kumar. Explaining about the facility, he said an Indian is entitled to withdraw $ 5,000 known as the basic travel quota in one year. Of the amount, there is a cap of $ 500 which can be carried as currency and rest in traveller cheques. In case a person is on a business visit, he is entitled to withdraw $ 2,50,000 per trip. Unspent forex bought by a traveller should be surrendered to an authorised person against payment in rupees within 90 days from the date of return if the unspent forex is in the form of currency notes. If it is in the form of travellers cheques, it has to be surrendered within 180 days.
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