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Sunday,
April 13, 2003, Chandigarh, India  
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Anxious clients flock to ICICI ATMs
What caused panic?
Businessmen keen to contribute towards Iraq reconstruction |
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G-7 meet on global economy, Iraq Corruption ‘blocking’ industrial growth
India’s GDP likely to grow over 6 pc
LIC not expecting high growth rates AVIATION NOTES
LETTERS
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Anxious clients flock to ICICI ATMs New Delhi, April 12 Frantic customers rushed to ATMs of ICICI to withdraw money after rumours about an impending liquidity problem spread from Gujarat yesterday. The RBI said in a statement that it was monitoring the developments and has arranged to provide adequate cash to ICICI Bank to meet the demands of its customers at the branches and ATMs. “It is
clarified that the ICICI Bank has sufficient liquidity, including in its current account with the RBI, to meet the requirements of the depositors. The ICICI Bank’s financial position is also sound”, the RBI statement said. Executive Directors of ICICI Bank Ms Kalpana Morparia said that the “depositors”, bondholders and lenders’ funds are safe with ICICI Bank”. “We would like to reassure our depositors and customers that ICICI Bank is one of the premier banks of the country and there has been no adverse change in the financial position of the bank. The bank is completely solvent and profit making organisation”, Ms Morfaria said. MUMBAI: A day after the ICICI Bank ATMs were besieged by customers in Ahmedabad, Rajkot, Surat and Anand districts of Gujarat on rumours that the bank was facing liquidity problems, the RBI and the ICICI stepped in to scotch rumours that the bank had plunged into a liquidity crisis. In Mumbai, depositors flocked to the bank’s branches and ATMs to withdraw money. At some branches police personnel were deployed as a precautionary measure. In Delhi, a bank’s spokesman said the situation was normal and there were no queues of customers flocking to the branches and ATMs to withdraw money. As panic spread from Gujarat, the RBI and the private sector bank said the bank had sufficient liquidity and was financially sound. The RBI said it was monitoring the developments and had arranged to produce adequate cash to the bank to meet the demands of the customers at its branches and ATMs. The bank had sufficient liquidity in its current account with the apex bank to meet the requirements of its depositors and the “bank is financially sound”, RBI said in a statement. ICICI Bank Executive Director Chanda Kochar said the rumours about the bank probably arose out of a confusion over the collapse of some cooperative banks in Gujarat recently. She said the bank’s branches were operating for 12 hours since morning and there was enough cash in ATMs and branches. “We are making sure that there is no shortage of cash in our branches and ATMs,” she said. A spokesman for the ICICI Bank here said the bank would ensure that all its ATMs and branches have enough cash. “Though the situation has eased after the RBI announcement this morning, depositors were still
queueing up”, he said. Ms Kochar said ICICI bank would remain open for the next two days, Sunday and Monday, “to make our customers feel comfortable so that they can withdraw money and make them feel that we are there for them.” |
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What caused panic? Chandigarh, April 12 The RBI has clarified that there was nothing to fear as the financial condition of the bank was sound. After getting these reports through various TV channels, the customers were reassured. There was no unusual rush at the bank’s ATMs or cash counters in the city. However, insiders said against total deposits of Rs 41,316 crore, the bank had advanced Rs 50,030 crore by December 31, 2002. This could be a reason for panic withdrawal. A bank official said: “Customers at some branch might have faced difficulties in getting the sanctioned loan or withdrawing large amounts of cash from their accounts, resulting in panic withdrawals.” Brushing aside the explanation of the ICICI Bank management that the collapse of some cooperative banks caused the panic, an RBI official said there was no link between the two. Mr S.N. Patnaik, Regional Head (retail banking), Chandigarh region, admitted that they were not able to understand the cause for panic withdrawals. He said:“The bank has earned Rs 868 crore net profit by December 31, 2002, and its financial position is quite sound. Since the net worth of bank is over Rs 6,000 crore, it can sanction loans more than total deposits. “We have made arrangements for additional withdrawal of cash during the holidays at our 100 ATMs in the region,” he added.
TNS |
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Businessmen keen to contribute towards Iraq New Delhi, April 12 “Information gathered by FICCI has revealed that Indian businesses are prepared and are in a comfortable position to make available supplies of a large number of items belonging to the six identified sectors”, said FICCI adding, “Infact, contracts for such items worth Rs 3,000 crore have already been entered into and Indian businesses both in the private and public sectors, would like the same to be executed at the earliest.” The OIP, which has nominated six UN organisations to take care of the delivery of goods to Iraq against the contracts (an extension of the ‘Oil for Food Programme’), has identified six priority sectors — food, health, water sanitation, education,
agriculture and electricity. While contracts worth US $ 10.1 billion covering items in the above six sectors are in various stages of execution from nearly 100 countries across the globe, FICCI is also taking a delegation to meet the OIP-UN officials in New York to present what India can offer and to ensure that
interest of the Indian businesses is taken care of , the Federation said. All deliveries under these contracts are proposed to be completed by May 12,2003. FICCI said that there is also a scope of entering into contracts worth Rs 2,000 crore in future. Urging the government to provide its support in this regard to the business houses in India, the Federation said that such projects would be much higher in value terms and would be spread out over a
longer time period and a large number of countries are vying for these projects. Industry representatives also said that the government needs to take up the issue of not including tea and wheat (India has contracts worth Rs 1,100 crore for wheat and tea), in the priority list of the food sector items. They also said that Indian companies are well placed to make available rice and sugar, electrical items including gas turbines , generators and transformers with minimum lead time, LPG cylinders, stationery, soyabean meals, water pipes and pesticides. |
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G-7 meet on global economy, Iraq Washington, April 12 Finance ministers and central bankers of Britain, Canada, France, Germany, Italy, Japan and the USA entered Blair House, near the White House, to discuss the world outlook. Even after the Iraq war, the economy faces menaces from terrorism, the costs of protecting trade, housing bubbles and the hangover from the late-1990s technology-driven stock market, finance officials say. The International Monetary Fund forecast this week that the world economy will grow by 3.2 per cent this year, barely up from 3.0 per cent last year, before a rebound to 4.1 per cent growth in 2004. “Nobody can estimate today with any precision the lasting costs of the war in Iraq. But so far, the risks of the war for the global economy have remained contained,” IMF managing director Horst Koehler said. Economic weaknesses in advanced economies predated the war, however, and countries must now topple long-standing obstacles to growth, he said before weekend IMF-World Bank meetings, which follow the G7 talks. Iraq’s debts, amounting to up to $ 127 billion, are not on the formal agenda of the G7 or the global financial talks. But the USA had promised to raise the issue.
AFP |
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Corruption ‘blocking’ industrial growth Chandigarh, April 12 The study, which covered five northern states, including Delhi, Haryana, Rajasthan and Uttar Pradesh, appreciated that in Punjab, industrialists did not consider state labour laws as problem for the growth of industry. Based on a survey of 106 companies and interaction with around 50 CEOs and heads of major manufacturing companies, the study took samples from the leading industrial towns in the region. Interestingly, none of the industrialists perceived that labour laws were holding up the growth of manufacturing sector in Punjab, while 100 per cent of the surveyed industrialists said corruption was a major problem in Uttar Pradesh. Only 20 per cent of the respondents found corruption a hurdle in Delhi. In case of Haryana, the study found that 67 per cent of units were not aware of the quality factor and 17 per cent of the respondents said labour laws were creating hurdles in the growth of industry. The study said over 60 per cent of the research laboratories set up in India by MNCs had been set up in the South, as against 5 per cent in the North. It identified work culture, government policies, quality systems, infrastructure, leadership, cultural background, industrial climate, technical education and training as the determining factors for the growth of manufacturing sector. |
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India’s GDP likely to grow over 6 pc
Washington, April 12 “Despite adverse developments in global economy and a severe drought, India achieved a reasonable growth of 4.4 per cent during 2002-03 and is likely to grow by over 6 per cent in 2003-04,” Jalan said at the spring meeting of IMF here. Addressing the International Monetary and Financial Committee, he said the relatively satisfactory performance of the Indian economy coincided with low inflation, strong external sector performance, record level of foreign exchange reserves and a vastly improved macroeconomic environment. “Industrial output is showing signs of recovery and export performance is robust. India is confident that its economic slowdown is bottoming out and a revival is under way,” he said. Jalan said the current policy framework was supportive of the revival process. “The Central Government Budget for 2003-04 contains several measures to facilitate the revival process and the monetary policy is
accommodative of the productive activity,” he said. Jalan, who led the Indian delegation at IMF, said other neighbouring countries like Bangladesh and Sri Lanka, have also been faring reasonably well.
PTI |
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LIC not expecting high growth rates
Kolkata, April 12 “We expect a 10-15 per cent growth in new premium income during the financial year 2002-03 from Rs 49,000 crore mobilised in 2001-02, but it will be difficult to maintain the compounded annual growth of 20 per cent recorded during the past few years,” Mathur told reporters here. He said the last two years were an aberration and there was spurt in premium income from single premium policies. In view of the government deciding to withdraw certain benefits, the premium income might come down. Earlier, addressing the 101st annual general meeting of Merchants’ Chamber of Commerce Mathur said LIC’s total income in 2001-02 was Rs 73,000 crore and the total payout by way of benefits to policyholders was Rs 17,000 crore. The growth of operations in recent years had ensured that the penetration of life insurance increased from 1.41 per cent in 1995 to 2.15 per cent in 2001, he said. The share of life insurance premium in gross domestic financial savings increased from 7.2 per cent in 1995 to 12.2 per cent in 2001.
PTI |
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AVIATION NOTES AIR
India’s internal problems remain unabated. Two groups at top are involved in an unprecedented ego clash.
Corruption charges continue to surface. Each faction is accusing the other of indulging in unethical practices. It is learnt, soon there will be another round of washing dirty linen in public, to the detriment of airlines already dwindling image and reputation. On the subject of ‘washing dirty linen in public’, there is an interesting anecdote. Way back in 1946, Iftikhar Ali Khan Pataudi was appointed captain of the Indian team to England. He was being criticised for making back-door entry in place of Mumbai’s Vijay Merchant. When the criticism was waging, a journalist asked captain’s reaction. Iftikhar, replied: “Let them do it here, but my boys will wear clean white shirts in England” ! The top brass in the national carrier should take a leaf out of Pataudi’s book and fight between themselves in the corridors of Nariman Point office on files instead of rushing to press. It is a fact that one official is leading a ‘charmed’ life and it will continue to happen, as long as he enjoys political backing. Apart from internal bickerings, terrorist unrest worldwide and US-Iraq war, the Severe Acute Respiratory Syndrome (SARS) has considerably affected the operations on certain profit-making sectors. The pilots, supported by their union, have expressed their inability to fly to affected areas in view of the SARS outbreak. The commanders of managerial status are being pressed into service since on-line pilots are wary of flying to destinations, like, Hongkong, Bangkok and Singapore. It means an additional expenditure to the airline. The additional set of managerial pilots will fly and bring back the flight without offering night halt to the crew which operated the flight from Mumbai, Delhi to Bangkok, Hong Kong and
Singapore. The presence of the second set of crew will mean reduction of seats on the aircraft. As the SARS fear has engulfed the entire region, the government has taken effective precautionary measures. Additional set of doctors have been posted at four international airports at Delhi, Mumbai, Chennai and Kolkata. All incoming passengers are being subjected to checks for any symptoms of the virulent fever. Health counters have been set up along with immigration counter. At Indira Gandhi International Airport (IGIA), an isolation room has been set up to provide instant medical help, if required. |
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LETTERS IN the Union Budget a very unusual provision has been made in the Income Tax Act relating to TDS. Clause 80 seeks to amend Section 206 (C) of Income Tax Act relating to Profits and Gains from the business of trading in alcoholic liquor, forest produce and scrap etc. TDS at the rate of 10 per cent is applicable to the trading of these commodities. This provision will come into force from June 1, 2003. This provision has baffled the experts as well as the layman. How can a commodity be brought under Income Tax? Sale of iron and steel scrap is the kingpin in the industrial economy of Punjab as elsewhere. Waste of yarn is similarly the basic activity in the textile and hosiery business. With 10 per cent TDS no sale can be affected under any circumstances. It means the entire industrial activities in Punjab shall come to a halt. About 40 per cent of direct tax revenue is collected under TDS. another 40 per cent is collected as advance tax. So taking cue from this situation policy makers thought to enter into the commodity arena, which is just illogical and illegal too. Coming to Punjab’s Budget the entry tax of 2 per cent in lieu of octroi has serious meaning to the industry. Earlier impression was given that all industrial inputs will get set off. Now the reality has come to the fore. At the best only handful of items, which are major inputs may be entitled for set off. This too is doubtful. Take few items for instance. Steel attracts octroi of Rs 80 per MT. Now it will up to as high as Rs 400 per MT. Steel scrap etc attract only Rs 20 per MT and entry tax will be 10 times at Rs 200 per MT. Burden on chemicals will be doubled, yarns used in hosiery will have to bear octroi 5 to 6 times higher. Cars will have to take a very heavy burden of entry tax. At present car irrespective of the value is being charged Rs 1,000 a piece. With 2 per cent entry tax car with average price of Rs 5 lakh will have to take a burden of Rs 10,000 which is 10 times higher. For cars of higher value the rate is sky. The government has relied on a very simple fact. Goods worth Rs 36,000 crore enter Punjab. At the rate of 2 per cent the octroi collection will be Rs 720 crore. Total collection of octroi in Punjab is worth Rs 550 crore. So with 2 per cent rate government has already inflated the figure by Rs 200 crore taking the growth of revenue in account. The exercise on alternative tax to octroi has to be rethought in view of these facts. Industrial inputs will become very costly and items of common consumption will see steep rise in prices. P.D. Sharma, Ludhiana Value Added Tax The BJP and the Union Finance Minister have washed their hands of VAT in the recently held BJP’s National Executive. A sizeable section of so called “representatives of masses” have kicked up a huge ruckus over the implementation of (VAT) regime. Indeed it must have been very embarrassing for FM to be told that VAT was a state subject and he should, therefore, move cautiously on it. One sympathises entirely with the FM who had no clue that his own partymen would protest in this unseemly manner! Neither the bureaucrats nor the ministers have tried to understand the subject in the real sense of term. The ruling party has made a mockery of the so-called “Economic reform process”. A politically bipartisan approach is needed for successfully implementing VAT. Senior leaders of BJP and other vocal-protesters say they favour VAT in principle. But they want Congress to accept its role in initiating the same. State BJP leaders are saying this because Assembly elections are due in several states and they do not wish to bear any negative ‘fallout’, particularly by way of increase in the prices of key-commodities. To sort out this problem there is need to depoliticise the concept-which is foreign in Indian political setup. No matter which sceptical commander stakes the command, the poor sufferer is none else than the trader/manufacturer. The following couplet sums up ruined fortunes: A beggar on a horseback lashes the beggar on a foot. Hurrah for the revolution!! The beggars change places; but the lash goes on ... Rajneesh Sharma, Ludhiana. |
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