RBI pumps out old Rs 500 notes
Canal breach switches off Teesta power project
Demat yet to gain wide currency
ITC raises prices of premium brands

New Delhi, March 19: 
Worried by the spectre of fake currency undermining the country�s economy, the Reserve Bank of India has instructed its branches and currency chests to replace Rs 500 notes of old design with new ones.

However the RBI, in a circular titled �Detection of Forged Notes�, has said that these notes remain legal tender throughout the country, and the branches and currency chests must continue accepting them from all other banks as well as from the public.

This will prevent the spread of panic in the economy, while the old Rs 500 notes are gradually withdrawn from the banking system.

The old notes have been issued before 1998 and has the Ashoka emblem on its left and a portrait of Mahatma Gandhi on the right.

The RBI will treat the old notes at its disposal as �non-issuable� or torn notes, �irrespective of their condition�, and replace them with new ones that have a hologram line running down the middle.

The move has been initiated because fake Rs 500 notes, that have been circulating within the economy for some time, are so alike with the original that it has become very difficult to detect them.

But the forgers have not yet been able to copy the hologram line in the new notes. The fakes can be spotted when ultra-violet rays are passed through the new notes.

The RBI has about 22 branches throughout the country, and its several hundred currency chests are operated by nationalised banks on its behalf. These offices, which act as counters for the RBI, have been asked to comply with the directive on a priority basis by this month.

The RBI has also instructed through the circular that all cash balances of re-issuable Rs 500 notes held by its branches and currency chests �should be re-examined as a one-time measure� to weed out forged notes.

This follows the RBI detecting a large number of fake Rs 500 notes that have been banked with it by government departments and commercial banks. In January and February alone, RBI found about 1,843 fake notes deposited at its Delhi office.

Banks have to statutorily keep a part of the money they receive from customers with the RBI, while some of the bigger government departments, like the Railways and Posts and Telegraphs, bank only with the RBI.

Meanwhile, a staff shortage at the central bank have led to delays in detecting forged Rs 500 notes.

The RBI is supposed to have a staff of 420 in Delhi to count and verify money deposited with it; but actually there is only half of that number.

Similar shortfalls have been found in other cities as well. The shortage is a result of a 10-year-old policy of halting recruitment.    

Calcutta, March 19 
The 67.5-MW Teesta Canal Fall project (stage I, II, III) has been shut down after a breach in the right bank of Mahananda main canal. The canal, which feeds water to the project, has given way in an area 13 kms off the Mahananda barrage.

The losses for the West Bengal State Electricity Board (WBSEB) arising out of the project�s closure have been estimated at Rs 8 crore.

The breach, which is believed to have first occurred on December 28 last year, exposes the negligence of the state irrigation department, which is supposed to maintain the canal.

According to estimates made by the state government, the annual gain in production from irrigation facilities is around Rs 100 crore.

Therefore, the losses in farm output from the closure of the project will be substantial, given that it feeds areas in Darjeeling district, West Dinajpur and Malda.

The Mahanada project feeds 330 cubic metres of water per second of during peak season and 110 cubic metres per second in the lean season.

Despite the fact that both the minister-in-charge of the irrigation and power department are aware of the problem, no efforts have been made to repair it till a month ago.

State government sources said the repair work could not be taken up earlier because of the resistance from the local people who wanted the job to be given to them. They said efforts are on to repair the breach by the end of April.

Since the project also generates hydel electricity, a desperate WBSEB has now been forced to meet the shortage in production by drawing more power from the National Thermal Power Corporation (NTPC), even though its does not have the money to keep buying expensive power from the central power generator.

�Although the repairs are underway now, the speed at which it is being done defies all logic. We have met Mrinal Banerjee and Ashok Bhattacharjee in the last two months due to the mounting losses. But not much progress has been made on the matter even though we held the last meeting on March 16,� a WBSEB source said.

�Villages near the site of the breach have been flooded. Besides, the board has to buy extra power from NTPC worth Rs 10 lakh per day in spite of the fact that we generate electricity at much cheaper rates from the Teesta river,� a source said.

The state�s installed hydel capacity is about 166 MW.

The Rammam project generates 51 MW, and Jaldhaka 55 MW; while about 10 MW is produced at smaller plants.

However, since the micro and mini plants are being renovated, their share of power is not available to the WBSEB at present.    

Mumbai, March 19 
With the information technology wave is sweeping the bourses, most investors are game to put their money on anything that smells of software. However, some are clearly reticent when putting their stocks at the mercy of anything technology.

Despite concerted efforts by the Securities and Exchange Board of India (Sebi) to popularise demat among retail investors a majority of them still prefer to hold physical shares.

This is apparent as none of the major pivotals like Reliance, Hindustan Lever, ACC, Bajaj Auto, Tata Steel and Telco feature in the top 50 demat scrips of the National Securities Depository Ltd (NSDL), the country�s premier depository. Shares of premier MNCs like Nestle, Cadburys and Colgate also fail to figure in the top 50.

Sebi had, in fact, insisted that institutions deal in certain scrips only in demat form, in a bid to give demat a jump start in the country.

Analysts aver that the reason why investors of economy stocks prefer to retain holdings in the physical format is because they are in the market for the long-term. Being generally conservative in their approach, they are willing to hold these stocks for a lifetime and find no incentives to dematerialise their shares.

Another reason is the costs involved in dematerialising shares and for holding them in demat accounts. Several banks insist that investors open a savings account and, in certain instances, maintain a minimum balance of Rs 5000.

In a bid to remove the roadblocks, the market regulator has recently set up a committee to study whether demat fees could be standardised. The committee is represented by officials from the market regulator�s office, depositories, depository participants and investor associations.

Significantly, quite a few technology stocks figure in the top fifty demat stocks. Infosys ranks fourth after Global Elec Com, Dabur and Apar Industries. The infotech major had launched a concerted campaign among its shareholders on dematerialising their shareholdings in the company. The move was rewarded with 95.31 per cent of its equity under demat at the NSDL.

However, infotech stocks from the Tata group like Tata Infotech, Tata Elxsi and Nelco fail to appear even in the top 100. Depository officials say that companies should themselves make an effort to get shareholders to demat their holdings. Instead, Tata stocks such as Andhra Valley, Tata Power and Telco figure in the bottom half of the top 100 demat stocks.

Other infotech stocks that appear in the top fifty are SSI Limited, Wipro, Pentasoft Tech, DSQ Software and Digital Equipment, which are in the top 15. Satyam Computer which is looking at an ADR listing ranks 35 in the list. However, technology stocks adapting to dematerialisation may not mean much, say analysts, as a majority of the investors in this segment are institutions and mutual funds. This is due to the exorbitant rates that infotech shares command in the market.    

Calcutta, March 19 
To offset the burden of a five per cent hike in excise duty on all sizes and varieties of cigarettes announced in the Union budget 2000-2001, tobacco major ITC Ltd has raised the price of two of its premium brands, Golf Flake Kings and Classic.

The price of a pack of 20s of Classic has been increased from Rs 44 to Rs 48 while price of Gold Flake Kings has risen from Rs 42 for a 20s pack to Rs 45.

ITC sources confirmed that the price hike had been effected but said that it was a normal post budget move.

Prices of other brands have not been raised as they belong to the price-sensitive categories where such a move could lead to a dip in sales.

Brand loyalty is much greater in the Gold Flake, Wills and Classic brands which is why these are ITC�s best sellers despite numerous prices hikes over the past decade.

The price hike has sent the retail black market into a tizzy as the company has not made a clear announcement so far.

With various old batches of Rs 42 and Rs 44 priced Gold Flake Kings and Classic still in the market, retailers are making a killing telling consumers that an even larger price hike is in the offing. Only the new packs of Wills Filter, with a printed price of 19, up Rs 1.50 are in the market. The price of old Regular (10s pack) has gone up to Rs 15 , an increase of Rs 1.

The rest of the industry too is expected to follow ITC�s lead. Initial industry estimates placed the additional burden on the industry at Rs 250 crore at the current sales level on account of the excise duty hike. Although the cigarette industry was admitted into the modvat regime, cigarette majors have all but discounted its benefits.    


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