Credit policy to outline market norms for banks
McKinsey date with Bengal linked to polls
Glaxo may prescribe VRS

 
 
CREDIT POLICY TO OUTLINE MARKET NORMS FOR BANKS 
 
 
FROM OUR CORRESPONDENT
 
New Delhi, April 7: 
Reserve Bank of India (RBI) would revise the guidelines for the banks’ exposure in the capital market in its monetary and credit policy to be announced on April 19. The decision was taken during finance minister Yashwant Sinha’s meeting with the chief executives of the public sector banks, here today.

“RBI is reviewing the existing norms and would announce the revised guidelines as part of the monetary and credit policy,” Devi Dayal, banking secretary, told newspersons after the four-hour meeting chaired by Sinha.

The banks were mandated to put 5 per cent of their investments into equities and other instruments such as debentures, but their average in this regard was only 2 to 3 per cent. Advances against shares were also at 3 to 4 per cent. The limit in this regard had not been imposed by the RBI. But the banks’ boards were to decide their own levels while following the prudential norms.

Devi Dayal said that the RBI was extending the one-time settlement scheme for reducing non-performing assets (NPAs) by three months — till June 30, for borrowers to approach the banks and September 30, 2001, for the final settlement.

Since the RBI had issued guidelines for the settlement of NPAs, public sector banks had settled over 5.84 lakh cases involving an amount of Rs 3,340 crore, he said. However, the level of banks’ NPAs would remain at last year’s level of about Rs 53,000 crore.

On the issue of recent irregularities in Madhavpura Mercantile Co-operative Bank, Devi Dayal said the chairman of Bank of India had clarified that it was not due to any failure of the bank’s functioning but due to the fraud committed by Madhavpura Mercantile Co-operative Bank.

The chairman assured Sinha that “a lot of the money would be recovered.”

“It is unfortunate that some unscrupulous elements have misused the facilities provided by the banks,” said Devi Dayal.

During the meeting, Sinha had emphasised the need for prudence and caution and asked the banks to tighten their internal supervision mechanism, he added.

Further, since banks are state-owned entities, the reservation policy in recruitment would continue even after the Banking Service Recruitment Board is scrapped to facilitate autonomous recruitment by the banks. The chief executives of the banks displayed eagerness to employ specialist staff in the field of information technology.

   

 
 
MCKINSEY DATE WITH BENGAL LINKED TO POLLS 
 
 
BY SUTANUKA GHOSAL
 
Calcutta, April 7: 
Waking up almost two-and-a-half years after ‘Destination Bengal’, the state government today outlined its plans for an image makeover for Bengal.

Following a meeting with Rajat Gupta, CEO, McKinsey & Co, the government today decided to appoint the global consultants after the Assembly elections to market the state worldwide and to bring in potential investors.

The state government also invited Gupta to set up a management and public health administration institute in Calcutta. Rajat Gupta and some of his NRI friends have shown interest in setting up one such institute in India.

The meeting, which lasted for 45 minutes, was attended by state chief minister Buddhadeb Bhattacharjee, Somnath Chatterjee, chairman of West Bengal Industrial Development Corporation (WBIDC), Jawhar Sircar, commerce and industry secretary and D.P. Patra, managing director WBIDC.

Regarding the date when McKinsey will start its job, Gupta told The Telegraph, “The state government will now have to decide when it can appoint us.”

In fact, the state government was supposed to appoint McKinsey in last September itself, when Jyoti Basu was the chief minister.

Acknowledging that there has been a delay in appointing the global consultant, Somnath Chatterjee said, “This will be a major task once the elections are over. Today’s talks have proved extremely fruitful. The state government and the consultant have reached a consensus on all issues.”

The chief minister, however, refused to reveal much.

“Since the election is round the corner, I cannot talk much about what will be our further course of action. But the meeting was fruitful.”

The delay in appointing McKinsey was not, however, due to the non-availability of funds. The industry secretary added the government has already set aside Rs 4 crore from its annual budget for the entire exercise.

Some government officials feel the “ideological problem” between certain ministries is the major stumbling block. “We have already missed the bus. We should at least do something now.”

McKinsey will undertake three exercises—investor process re-engineering, bringing out a ‘guidebook’ of approval for bureaucrats and officials identifying priority sectors and intensification of efforts towards attracting investments, mainly targeting multinationals and foreign investors.

The consultant will enter into an annual contract with WBIDC for the entire exercise.

The international consultant will also help the state negotiate with foreign investors. McKinsey will work out a package which the government can use to hardsell the state before prospective investors.

   

 
 
GLAXO MAY PRESCRIBE VRS 
 
 
FROM VIVEK NAIR
 
Mumbai, April 7: 
Once the merger process between Glaxo India Ltd and SmithKline Beecham Pharma Ltd is completed, Glaxo is planning to retire some of its present workforce by offering a voluntary retirement scheme.

While Glaxo India official denied that the company is contemplating a VRS at this point of time, he admitted that such an issue may be examined at a later stage.

“It is too early to say anything at this stage. Even if such a development occurs, it will be after the merger process is completed,” the official said. The process is expected to be completed by the end of this year.

The company is likely to target the field workforce for the golden handshake which will swell to over 2,400 after the merger. “Such a field force will be difficult to manage even if the merged entity ends up with a portfolio of around 200 brands. It will, thus, make a lot of sense if the company unveils a VRS,” said a senior pharmaceutical analyst.

While both the companies are concentrating on integrating the their product profile and other structures, sources add that Glaxo is likely to put its existing programme of tail-end brands on the fast-track. There will be an exercise to identify the top brands of the combined entity and a pruning thereafter.

“The combined entity will have to accommodate the non-core products of SmithKline Pharma too,” said an analyst with Khandwala Securities.

The new entity, GlaxoSmithKline Pharmaceuticals Ltd will come in with retrospective effect from January, 2001. It will have a combined turnover of over Rs 1,300 crore and a market share of over 7 per cent. The company will have a diverse product range in gastroenterologicals, anti-inflammatory steroid products, topical antibiotic preparations, anti-fungal preparations, vaccines, apart from products in antibiotics, deworming and other over the counter (OTC) products like Iodex.

Despite SmithKline Beecham Pharma having certain therapeutic brands, it is widely perceived that Glaxo is stronger in the prescription segment and SmithKline Beecham in the OTC category.

Though the recent performance of Glaxo India have not enthused the analysts, it is averred that the merger will generate adequate synergies.

   
 

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