Sinha promises to clean up stock markets
Pay-out problems surface at CSE
Rupee, gilts sucked into firestorm
Bears under tax watch
RBI restrains Madhavpura Coop Bank operations
No fetters on the Net
ITC raises Wills Filter price by 21%
Dabur board to have more directors
Foreign Exchange, Bullion, Stock Indices

New Delhi, March 13: 
Union finance minister Yashwant Sinha today rejected the Opposition’s demand for a probe by a Joint Parliamentary Committee into the stock market plunge, saying Securities and Exchange Board of India (Sebi) is already on the job and will submit its report in mid-April.

He said the government is committed to demutualising stock exchanges and to sever the nexus between brokers and stock exchange administrators. De-mutualising will pay the way for corporatisation. Once this is done, the ownership, management and trading membership will be separated from each other.

Replying to a calling attention motion in the Rajya Sabha on the stock market crisis, Sinha told the Upper House that the government ‘was in complete control of the situation’.

The Centre, he said, will take administrative steps and seek Parliament’s approval for legislative measures to corporatise bourses. He assured the House that those guilty of rigging the market will not be spared. “There should not be an impression that we are doing anything to protect anybody. We will do nothing to sweep matters under the carpet.”

Sinha dismissed the Opposition’s allegation that Sebi had failed to live up to expectations as a market watchdog. He defended its chairman, D R Mehta, saying the government has no doubts whatsoever over his integrity.

He promised investigation by other agencies if it is necessary, but said the government will wait for Sebi’s findings. In addition, legislative changes may be made in the Sebi Act, 1992 to give the watchdog more teeth and to protect investors. “Sebi performs a quasi-judicial function and it is the competent authority to undertake such work,” said Sinha.

He scoffed at arguments that the reduction in interest rates in the budget was designed to wean away small investors from the government’s saving schemes to stock markets.

Talking about the payment crisis on the Calcutta Stock Exchange, Sinha conceded there was a one-day delay in the pay-in, but not in the pay-out. Sinha refuted the charge that the Sebi had delayed the inquiry into the 1998 stock crisis. He attributed the delay to the quasi-judicial nature of Sebi’s role and the fact that it has to function within the framework of the law.

He said the government had already taken several administrative measures, including the removal of the BSE president. “The fact that two presidents have been changed in the last three years is proof that Sebi has taken tough steps.”

Replying to a question on the merger of Global Trust Bank with Unit Trust Bank, Sinha said the market regulator has submitted its interim report in the issue to the Reserve Bank of India. “The central bank is the autonomous body to look into this aspect and to take a final decision on the merger.”

He rebuffed charges that public sector banks have poured big sums into stock markets at their peril. “Never has the RBI’s norm, that banks should limit their stock investments to 5 per cent of their total credit, been violated,” he said.


Calcutta, March 13: 
A major crisis threatens to engulf the Calcutta Stock Exchange (CSE) with a distinct possibility that the bourse may default on the pay-out for settlement number 149 slated for March 16. The reason: the Rs 600 crore trade guarantee fund may be inadequate to cover all the pay-in liabilities.

Market mavens says that over 250-300 brokers of the bourse will default on payments unless four major brokers including former CSE president Dinesh Singhania clear their respective dues to the bourse as well as vyaj badla operators.

In vyaj badla, a broker takes a position on a scrip from a big broker; if the price of the scrip increases, he gets the differential from the exchange. But if the price falls, he becomes liable to pay the exchange.

In the second instance, the big broker meets the losses on behalf of the vyaj badla operator. But now the situation is so abnormal that the vyaj badla operators have already given up all hope of getting payment from the four top brokers.

The problem has arisen because the market estimates that the total funds required to square up the brokers’ positions would be in the region of Rs 2500 crore, one CSE member said.

“There are over two crores of Himachal Futuristics shares in the hands of vyaj badlawalas most of whom are also small brokers. The price of the scrip has come down from Rs 780 to Rs 225 during the last couple of weeks. Hence, a sum of over Rs 1000 crore has been lost only in one scrip,” the member said.

The situation is much the same in a couple of other scrips like Global TeleSystems, Zee Telefilms, Satyam Infoway and DSQ Software.

The situation has been complicated by the fact that there are no buyers in the market which has been roiled over the past 10 days.

“Most of the the battered scrips are frozen and even if you want, you cannot sell the securities. You are simply sitting idle on these scrips and slowly being ruined in a plunging market,” sighs another broker.

CSE executive director Tapas Dutta today asked all the brokers, who have pay-in obligation, to provide documents to prove their “ability to make payment on due date.” If they are unable to furnish the proof, he has threatened to ‘de-activate’ their terminals tomorrow.

The majority of the brokers admitted that they were unable to garner funds to meet their pay-in commitment. The irate brokers also allegedly manhandled Dutta because of his failure to take action against the four major brokers.

In order to defuse the crisis, CSE has amended the provision that requires a broker to be first declared as a defaulter before funds can be drawn from the TGF to square up his position.

“This will give the four brokers breathing time while the vyaj badlawalas will not get anything,” explained a broker.


Mumbai, March 13: 
The rupee was knocked to 46.6450/65 against the dollar and government security prices tripped 75-90 paise as the turbulence spilled over from trouble-torn bourses into the money and forex markets.

The slump came amid foreboding from analysts that the market would continue its lurch following fresh political concerns sparked by the release a controversial videotape purported to blow the lid off corruption in defence contracts.

Forex market circles say the rupee will remain under pressure as the convulsions in stock markets push banks and companies into making quick dollar purchases. “With the equity markets skittish, the rupee is under pressure. Everyone wants to pick up dollars. We may see some big buying tomorrow,” said a forex analyst. Reflecting the lack of confidence, the rupee closed at 46.6450/65 compared with its previous finish of 46.56, recording a loss of over 8 paise.

Money markets wobbled. Government security prices gave up the gains made in the past few days on heavy selling. Rumours that the Ahmedabad-based cooperative bank, Madhavpura Bank was facing trouble in its stock market exposures unnerved investors already spooked by the market mayhem.

“In the government securities market, the participants have made huge profits from the fall in interest rates after the budget. Most of them used today’s developments as an opportunity to sell securities and get rid of their excess holding,” said N Balasubramanian, general manager, ICICI Ltd.

In the bullion market, silver prices declined due to poor industrial demand and a weak trend in the London mart; gold prices slumped due following limp prices in Hong Kong.

Ready silver (.999 fineness) opened weak at Rs 7410 and declined further to end at Rs 7390, showing a steep fall of Rs 100 over the last close of Rs 7490. Raw silver (.916 fineness) dropped by Rs 95 to Rs 7280 from yesterday’s close of Rs 7375 and tenderable silver fell to Rs 7395 from Rs 9495.

Standard gold, which started subdued at Rs 4330 and dropped further to end at Rs 4320, showed a sharp fall of Rs 20 over Monday’s finish of Rs 4340. 22-carat gold was nominally quoted weak at Rs 3995 as against the previous day’s close of Rs 4015. Ten-tola gold bar (.999 purity) fell sharply by Rs 250 to Rs 50,600 from the last close of Rs 50,850.


Mumbai, March 13: 
During the last financial year stock markets went into a tizzy when income tax officials visited the offices of a leading big bull in what they called a “routine survey”.

This year the department, for a change, has shortlisted some leading bears and most of the names are those that the Securities and Exchange Board of India (Sebi) has held responsible for causing the infamous crash on March 2, the Black Friday.

The long arm of the income tax department would hardly be of any concern to the big bulls as their profits took a dive this year.

However, for the bears it is a different story. Their coffers which have swelled after the Black Friday are under the scrutiny of the tax department.

Last year when bourses broke new records both in trading volumes and share prices tax officials swung into action to make brokers pay their advance tax installments. It was the bulls which the department targeted for raising the money. This time it is the turn of the bears to fill up the government tax kitty.

According to income tax sources, advance tax paid by city brokers last year increased by more than eight times in the fiscal compared with the corresponding period of the previous financial year. Advance tax payments made by brokers in 1998-99 amounted to just Rs 39 crore. It increased to Rs 320 crore in 1999-2000.

The increase in the payments was almost commensurate with the increase in trading volumes registered by the BSE during the year under review.


Mumbai, March 13: 
The Reserve Bank of India (RBI) today put a freeze on all banking activities of the Ahmedabad-based Madhavpura Mercantile Cooperative Bank Ltd (MMCBL) with immediate effect following a payment crisis.

Under the RBI directive, MMCBL cannot transact any banking activities like accepting deposits, borrowing from the market and issuing fresh loans without prior written approval from the apex bank, RBI sources said here.

The RBI move comes in the wake of a payment crisis at MMCBL as over Rs 50 crore were withdrawn by depositors on the back of rumours that the bank had lent money to brokers specially in the backdrop of the crisis in the stock exchanges.

RBI has taken charge of the co-operative bank’s books of accounts, the sources said adding, the directions were under Section 35A of the Banking Regulations Act.

The central bank took this step even as a RBI investigative team is in Ahmedabad to inspect various affairs of the bank.

Senior RBI officials here told The Telegraph that according to the directive, a depositor of the bank will not be permitted to withdraw amounts exceeding Rs 1,000 of his total balance in any account at a time.

This move, they explained, will safeguard the bank from any liquidity problem and prevent any drastic withdrawal of deposits.

“The whole idea behind this is that the bank does not give any preferential treatment to anybody,’’ the sources added.

RBI is also believed to be examining in detail various affairs of the bank, particularly its exposure to stock markets and big bull Ketan Parekh. While RBI officials did not comment on this issue, they hinted that the team was examining in detail, the prevailing situation at the bank.

Market rumours say that Ketan Parekh has borrowed nearly Rs 125-150 crore from the bank.


New Delhi, March 13: 
Information technology and the internet in India can grow better in a less regulated environment.

According to Harris N Miller, president, Information Technology Association of America (ITAA), while the world’s innovators are moving swiftly to bring tomorrow’s technology today, they may face increasing and unintended but still very serious resistance from regulators and legislators.

He said the Indian government will help boost internet growth with less regulation, particularly in view of the growing number of subscribers.

“Markets — not Washington nor Brussels nor New Delhi bureaucrats — are best equipped to anticipate consumer needs, now and into the future,” said Miller.

Commenting on the government’s interference in the name of privacy, Miller said an informed consumer can make his or her own privacy decisions and establish his or her own level of comfort with providing personally identifiable information.

“The market is meeting those demands, and interference from regulators will again risk slowing growth, not promoting it,” claimed Miller.

He urged India to work with the US in reducing the regulation on the internet.

“The United States is the leader in minimising regulations on the internet, but our friends in Europe, especially in the European Commission, are at the other end of the spectrum. I encourage you to join the US government and the global internet industry in opposing a ‘government-knows-best’ model.”

“We are going to have to be much more forceful if we want to stop the Europeans from their seemingly unrelenting desire to tax and regulate the internet, and, in turn, to export their thoughts to other parts of the world,” he added.

Commenting on taxing e-commerce, Miller said it is a vexing issue for governments around the world.

“This is a backward looking view, spurred on once again by entrenched brick and mortar interests. Asking young companies to collect and remit taxes amidst a sea of conflicting state and local tax rules and regulations is as unrealistic as it is unnecessary.”


Calcutta, March 13: 
Buyers of ITC cigarettes are paying through their nose — the company is using the budget-imposed 15 per cent special surcharge to replenish the National Calamity Fund as a ruse to jack up its prices by a staggering 21 per cent.

The tobacco-to-hotels major will see its coffers swell more than what it pay the exchequer in additional taxes. No senior company official was available for comment on the fact that a Wills Filter stick is now dearer by 40 paise; a packet of 10 cigarettes costs Rs 23 from this evening against Rs 19.

According to retailers, ITC agents have said other brands will appear in new packs with revised prices over the next few days.

Godfrey Phillips, VST, Golden Tobacco, which had been waiting for the industry leader to winch up prices, are expected to follow suit in the next few days. A retailer at Bentinck Street said buyers who feel the pinch of the four-rupee price increase per packet have started opting for sticks.


New Delhi, March 13: 
Dabur India Limited plans to induct three more directors on its board by the end of this month, a company spokesperson said.

An enabling resolution to increase the number of directors from from the present 15 to 20 was passed at the company’s extraordinary general meeting held here today.

Though the resolution passed today allows for a maximum of 20 directors, the company presently plans to increase it to 18 only, the spokesperson said. He added while the company will reduce the number of directors in future, the percentage of independent members will remain intact.

V. C. Burman, chairman, Dabur India said, “The increase in the number of directors was required to meet the provisions of the corporate governance code.”

Under the code, 50 per cent of the directors of a company with an executive chairman should be independent. At present, Dabur India has six independent directors and nine non-independent ones. “To take the number of independent directors to nine, three more will be inducted this fiscal,” the spokesperson said.



Foreign Exchange

US $1	Rs. 46.66	HK $1	Rs.  5.90*
UK £1	Rs. 67.98	SW Fr 1	Rs. 27.70*
Euro	Rs. 43.06	Sing $1	Rs. 26.10*
Yen 100	Rs. 38.87	Aus $1	Rs. 23.30*
*SBI TC buying rates; others are forex market closing rates


Calcutta				Bombay

Gold Std (10gm)	Rs. 4435	Gold Std (10 gm)Rs. 4320
Gold 22 carat	Rs. 4190	Gold 22 carat	Rs. 3995
Silver bar (Kg)	Rs. 7400	Silver (Kg)	Rs. 7390
Silver portion	Rs. 7500	Silver portion	Rs. 7395

Stock Indices

Sensex		3540.65		-227.24
BSE-100		1678.02		-127.10
S&P CNX Nifty	1124.70		- 73.25
Calcutta	 117.60		-  7.63
Skindia GDR	 654.62		- 17.37

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