New York, October 5
Financial services major JPMorgan, which rescued two troubled banks within a span of seven months, has now been accused of putting the final nail on Lehman Brothers, says a media report.

"JP Morgan has been accused by its Wall Street rivals of dealing the final hammer blow that forced Lehman Brothers into collapse in a sensational claim that threatens to spark a colossal legal battle," the Sunday Times reported.

The giant American bank is alleged to have frozen $17 billion of cash and securities belonging to Lehman on the Friday night before its failure, the daily added.

Lehman Brothers filed for bankruptcy two days later on Monday, triggering a series of collapse of financial institutions in the US and Europe.

The allegations were raised in a filing at the bankruptcy court in New York, lodged late last week, the newspaper said.

"The creditors committee understands that LBHI (Lehman Brothers Holding Inc) had at least $17 billion in excess assets which were held at JPMC (JP Morgan Chase) on the Friday going into the weekend before its bankruptcy filing," 
Sunday Times said quoting documents.

"The creditors committee further understands that, on September 12, 2008, JPMC refused to allow LBHI access to its excess assets and instead 'froze' LBHIs account. In freezing LBHIs assets, JPMC was purportedly holding all of LBHIs assets as a potential offset against any claims JPMC may have had against LBHI," the documents said.

Before Lehman's bankruptcy JPMorgan had agreed to buy investment bank Bear Sterns and had paid $2.3 billion.

Later in September it also agreed to purchage Washington Mutual's banking assets for $1.9 billion. — PTI

New Delhi, October 5
With financial institutions falling prey one after another to the global credit crisis, the bailout packages announced by various governments across the globe are inching towards $2-trillion mark — an amount nearly double the size of Indian economy.

With the US Congress giving nod to $700-billion aid for troubled financial institutions in the country, the US government alone has announced a total package worth about $990 billion.

Besides, a handful of European countries have already announced packages worth a similar amount in efforts to save their troubled financial entities.

There are expectations for more such instances of helping hands coming from the governments in Europe as the crisis is said to be fast spreading in the region after a full-blown blast in the US.

However, nothing of this sort is expected in India as the country and its financial institutions have remained mostly insulated from any direct impact of the crisis.

Still, the collective bailout packages in the US and Europe, currently at about $1.8 trillion, could soon be double the size of $1-trillion Indian economy.

India's GDP is estimated at Rs 46,93,602 crore for the latest fiscal 2007-08, which stands at just over $1 trillion based on the current exchange rate of about Rs 46.8 to a dollar. — PTI

New York, October 5
Indian companies listed on the American bourses lost close to $10 billion during the past week, with IT bellwether Infosys witnessing the maximum erosion of about $2 billion.

The 16 Indian firms listed on NYSE and Nasdaq saw their collective market capitalisation dip to $78.9 billion from $88.7 billion at the beginning of the week.

The loss registered by the Indian American depository rates is mainly because of the meltdown at the US bourse and has been mostly in line with the broader market trends, analysts believe.

Among these firms, about half a dozen IT and ITeS firms together lost more than $4 billion in their market value during the week.

However, Internet firm Sify Technologies posted a modest gain of about $3 million.

While Wipro shed $1.69 billion, Satyam Computer Services saw a drop of $938 million in its valuation and Patni Computers witnessed a decline of $72 million.

Besides, ADRs of outsourcing firms Genpact, WNS and EXLService and that of Rediff.com dropped between 4-12 per cent during the week.

India's two largest private sector lenders — ICICI Bank and HDFC Bank — together saw their market cap plunging by nearly $2 billion.

ICICI Bank dropped 8.6 per cent during the week, with the market capitalisation declining by $1.19 billion. HDFC Bank fell by 6 per cent, while its valuation decreased by $810 million.— PTI

London, October 5
NRI steel tycoon Lakshmi Mittal has lost £16.6 billion in the global credit crunch owing to plummeting stock markets in the last four months, media reports said here today.

The 58-year-old Mittal heads a list of 10 super-rich losers who together have seen their share portfolios shrink by about £23 billion from their peaks, The Sunday Times claimed.

Another NRI entrepreneur Anil Agarwal, who built up his metals empire, has seen his stock plummet by £2.7 billion.

The height of Mittal's losses dwarfs those of others in the list of top 10 losers, which include Mike Ashley, the beleaguered owner of Newcastle United football club and the retailer Sports Direct.

Mittal has seen his family's stake in ArcelorMittal fall from £33.24 billion on June 4 this year to £16.63 billion at the close of Friday's markets. — PTI

Chandigarh, October 5
The deposit war amongst banks at the end of second quarter of the financial year now, turned out to be a perfect business opportunity for various boards and corporations. These government corporations allegedly kept away all business ethics to make a quick buck through arbitrage.

Sources in the banking sector informed TNS that this year at least two corporations in Haryana have indulged in this illegal practice of hedged investment to capture slight differences in price. These corporations allegedly borrowed hundreds of crores from a bank at 11-11.25 per cent rate of interest as clean loans - where no security is required to be paid by a good-performing institution. This money has subsequently been invested as bulk deposits for a period of just 15-30 days, at 12.25 per cent rate of interest.

It is learnt that one of these corporations had taken a loan of Rs 400 crore at 11.50 per cent rate of interest. At least Rs 200 crore from this short-term loan has been re-invested as bulk deposit of Rs 100 crore each in two separate banks. While one fixed deposit has been made for a period of 15 days, the other has been made for a period of 30 days. Both these deposits will yield an interest of 12.25 per cent, which is unprecedented in the Indian banking sector.

It’s not just arbitrage, but boards and corporations have also refused to obey the directives issued by the Union finance ministry to park majority of their funds in public sector banks. Since the private sector banks come up with various financial products in short-term bulk deposits, by offering high rates of interest, these institutions are investing their money in high-yielding deposits.

These institutions are also ignoring the Government of India order, asking all PSUs to maintain a 60-40 ratio while going in for bulk deposits (60 per cent for card rate and 40 per cent on finer rate of interest). The RBI, too, has cautioned banks against relying on these bulk deposits as it could lead to a funding crisis, as in the case of the USA. They have asked the banks to focus more on core deposits. Troubled at the growing trend, RBI has stepped up vigilance on banks to ensure that a similar crisis situation may not arise here.

Q. I won a sum of Rs 1 lakh by solving a crossword puzzle. I have received the above amount after deduction of tax @ 30% plus education cess of 3%. Is the net amount received by me taxable or I will have to gross up the same and claim adjustment for tax deducted at source against the tax payable on my other income?

— Anand Kumar, Hisar

A. Section 115BB of the Income-tax Act 1961 (the Act) provides that gross winnings from lotteries, crossword puzzles, races, including horse races (other than income from the activity of owning and maintaining race horses), card games and other games of any sort or from gambling or betting of any nature whatsoever are chargeable to Income-tax at a flat rate of 30% on the gross winnings without claiming any allowance or expenditure. The rate of 30% would be increased by the applicable education cess and surcharge on income-tax.

With the US facing its worst financial crisis since the Great Depression of the 1930s, the negative effects will continue to loom large over domestic market this week. Investor confidence has been shattered by the collapse of large US investment banks.

Nervousness and uncertainty over the approval of the bailout package by the US House of Representatives also kept the market on tenterhooks last week. The bailout package announced and passed in the US ushers in one of the most far-reaching interventions in the economy since the Great Depression.

The Sensex lost over four per cent to close the week at 12,526, just above the support level of 12,500. Nifty was down last week by 166 points to close at 3,818.

Weakness in Indian equities also stem from the fact that FIIs (Foreign Financial Investors) have continued to press sales.

Going forward, markets may continue to remain weak in view of negative news coming out of the US and continuous selling pressure from FIIs. Markets, though may pause to take a view of the results season, where Infosys will declare its second quarter results on the 10th of October. It would be interesting to see the content of the results and the guidance that Infy gives for the rest of year in view of the ongoing turmoil in the US.