Govt sets reform terms to clear dues of SEBs
Sebi team set to probe bear cartel
Peeved leasing firms may move court
HSBC, LIC cut home loan rates

New Delhi, March 3: 
In its bid to energise the power sector, the government today linked the settlement of dues of various state electricity boards (SEBs) to a time-bound reforms programme.

At the chief ministers� meeting on power reforms, the Union government offered a one-time settlement package to clear dues of more than Rs 26,000 crore owed by SEBs to central public sector units provided the state governments accept a time-bound reforms programme.

An expert group, consisting of representatives of state governments, PSUs, financial institutions and the Union government, will soon be set up to prepare a package. The group will give its report within three weeks of its constitution.

The initiative would, however, depend upon the acceptance of chief ministers to prepare a firm reforms programme and sign a memorandum of understanding with the Centre to implement the reforms.

The conference also passed a resolution which sought to complete metering of all consumers by December.

The meeting suggested that interest rates of Power Finance Corporation (PFC) and Rural electrification Corporation (REC) should be brought down to reflect market conditions.

The conference also passed a resolution that continued supply of power from central generating stations would have to be linked to capacity to pay for current purchases and securitisation of past dues.

Speaking at the conference, Union finance minister Yashwant Sinha said: �We can think of a one-time solution to SEBs outstanding. We can find money to help states provided states agree to adhere to a time bound reforms programme. Resources will not stand in the way of reforms. We can find money. There will be no need for guarantees and counter-guarantees if states take up reforms.�

�The package would be in addition to the securitisation package. However, the one-time settlement for clearing the backlog can yield results if SEBs start breaking even and posting profit in future. There can be no conviction if they slip back after clearance of the burden of backlog,� he added.

Inaugurating the conference, Prime Minister Atal Behari Vajpayee said power sector reforms failed because the problems in this sector were not treated with a comprehensive and long-term national vision.

�Each state has its own problems and needs to chart its own path for reforms. It is not our intention to present a single blueprint for all the states. The ministry of power is, therefore, entering into state-specific memoranda of understanding to support them to undertake specific time-bound programme of reforms,� he added.


Mumbai, March 3: 
The Securities and Exchange Board of India and the two premier bourses of the country�Bombay Stock Exchange and National Stock Exchange�have decided to turn the heat on the bear cartel which is suspected to have manipulated the crash in stock prices yesterday.

The three have formed a fact finding committee which will visit offices of the member brokers alleged to be part of the cartel. The committee will start inspecting the records of those brokers who are suspected to have caused the crash in the stock markets.

�I would� not call it a probe or an investigation,� Anand Rathi, president of the Bombay Stock exchange (BSE), told The Telegraph, confirming that his exchange was contacted by Sebi, perturbed by the dramatic fall in the markets. It is a fact finding mission to inspect the records of certain market players, he added.

The team headed by a Sebi member will have representatives from the market regulator�s office and the two exchanges�BSE and NSE.

The team will head for the offices of members of stock exchanges to ascertain for themselves whether a bear cartel is functioning which led to the dramatic decline in the stock markets yesterday, a Sebi official said.

The finance ministry is also said to be worried over yesterday�s bear hammering.

Sources at Sebi say the scrutiny is the first of its kind in the history of Indian stock markets.

Officials of the capital market regulator today confirmed that an investigation has begun with the help of the stock exchanges but declined to give further details.

�The unusual movements of the sensex and whether certain entities are trying to take advantage are being analysed,� Sebi sources said adding that �activities of certain foreign institutional investors and broking firms,� are being looked into.


Calcutta, March 3: 
The Hire Purchase and Leasing Association (HPLA) has threatened to move court against the budget proposal to impose 5 per cent service tax.

HPLA president Abhishake Rungta said the imposition of service tax was illegal because the hire purchase companies were already paying sales tax. A company should not be taxed both for sales and services, he said.

According to Rungta, the government has overlooked the constitutional aspect of the whole issue.

The proposed levy was also �completely discriminatory� as service tax would not be applicable on the transactions of financial institutions as well as other modes of funding, he said.

Rungta said an appointment with Sinha was being sought.


Mumbai, March 3: 
Following the trend set by Housing Development Finance Corporation (HDFC), HSBC today reduced its interest rates on home loans to 13 per cent. HSBC said the reduction in rates was in response to the Reserve Bank of India�s move to bring down the bank rate further by 50 basis points. �The recent cut in bank rate allows us to reduce our rates on home loans and we are pleased to pass on this benefit to our customers,� said Richard Cromwell, senior manager, personal banking and cards, HSBC India.

A HSBC press statement said that most of its home loan customers avail of loans in the 8-15 year tenor and prefer the floating rate structure. Existing home loan customers with existing floating interest rates will therefore benefit by a 60 basis point reduction to 13 per cent.

For loans in the tenor of on eto seven years, the floating rate has now been reduced to 15.5 per cent while the fixed rate stands revised to 16 per cent and in the case of loans with tenor of 8-15 years, it now stands at 13 per cent and 14.1 per cent respectively.

Meanwhile, LIC Housing Finance Ltd (LICHFL) has cut its lending rates on individual housing loans by 50 to 225 basis points with immediate effect in line with other housing finance institutions.

Loans up to Rs 50 lakh having term maturity of one to five years would have a rate of 10.75 per cent, LICHFL said in a release here today.

The rates for the loan slabs of up to Rs 25,000 and Rs 25,001-2,00,000 having tenure of six to 10 years would be 11.50 per cent while loans in same slabs with 11-15 years tenure would be 11.75 per cent, it said.


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