10 june 2000

government may sell its stake in vsnl, mtnl
new delhi: as part of its disinvestment plant, the government will privatise both its blue chip telecom public sector undertakings, videsh sanchar nigam ltd and mahanagar telephone nigam ltd by bringing down its stake to 26 per cent. at present the government owns 56 per cent stake in mtnl while the government’s holding in vsnl stands at 54 per cent. a decision to this effect is likely to be taken at the the next meeting of the cabinet committee on disinvestment scheduled to be held on june 23.

the core group of secretaries on disinvestment had already recommended further disinvestment of the government equity in the vsnl and mtnl. it had also pointed out the need to induct a strategic partner in mahanagar telephone nigam. the group was of the opinion that in face of the stiff competition to mtnl from the private sector, any delay in the induction of strategic partner would adversely affect the realisation from the disinvestment of the government equity in the company. 

department of telecom services (dts) which is the service providing arm of the communications ministry has, however, opposed to further disinvestment in mtnl and vsnl. it has also opposed the proposal of doing away with the monopoly of the vsnl before 2004. 

dts pointed out that it would be unfair and against the interest of the investor to consider the monopoly issue of the vsnl over international long distance telephony by 2002 against 2004 assured earlier.

9 june 2000

rupee settles down after intra-day high, as rbi talks tough
mumbai: in a tough move to control the rupee from going out of control and collapsing against the dollar, the reserve bank of india banned banks from holding speculative dollar positions and ordered them to square their positions. this move came as the rupee sank against the dollar in the morning to touch an intra-day low of rs. 44.95/96. the rbi intervention lead to a marginal recovery in the value of the indian currency and it finally finished at rs. 44.74/76.

the six month (annualised) forward premium did not witness much movement throughout the day, but at close it fell to 3.06 per cent. the 12-month forward premium closed at 3.15 per cent against wednesday's close of 3.14 per cent.

market analysts were not apprehensive of the ruppe’s slide, since, globally, the us dollar has been appreciating against most currencies. noted forex dealers feel that the rupee was quoting high against the european currencies, and a 6-7 per cent depreciation of the rupee per year is within expectations.

8 june 2000

karnataka signs deals worth rs 4,000 crore at investors meet
bangalore: the recently held global investors' meet, organised by the government of karnataka, is seemingly proving to be getting the government closer to its objective of attracting investment into the state.

it is reported that the state has struck deals worth nearly rs 4,000 crore in sectors ranging from telecom to auto. a majority of the mous to execute these projects were signed today.

nearly half of the investment has come from the it-backbone initiative. some of the biggest industrial groups in the country today committed to invest a total of rs 2,095 crore to set up fibre optic networks in the state.

mous have been already been signed with bpl group, reliance industries, zee telefilms ltd (ztl) and enron india for setting up fibre optic networks, and agreements with other companies lucent technologies, bharathi mobile and spectra net is expected to be signed soon.

the millennium it policy of the karnataka government has substantial concessions and reliefs for it parks. proposals for 11 it parks have been approved under the gim. total investment is expected around rs 917 crore. five of the 11 parks would be coming up in mysore and hubli. infosys, reliance industries, satyam computers and digital equipment are some of the major players.

major non-it investments include tvs suzuki’s auto projectat mysore at a cost of rs 450 crore to make motor cycles, scooters and mopeds. the international tech park will commence phase 2 at a cost of rs 500 crore.

6 june 2000

housing finance major, hdfc, may merge bank with itself
mumbai: in a report appearing in the economic times, it is understood that housing finance major, housing development finance corporation (hdfc), is considering a possible merger with associate company hdfc bank.

the report quotes the chairman of hdfc as saying that the financial institution is seriously looking at the option, given the synergies between the two entitites. the impetus for this consideration seems to have come from the revision in the policy by the reserve bank of india, which allows the universal banking concept, that allowed financial institutions the option to transform into a bank provided they meet prudential norms.

an added advantage of a merger would be that lending rates on housing finance would drop since the company would be in a position to prune its cost of funds. hdfc’s costs of funds in 1998-99 stood at 13.65 per cent, almost twice that of the bank’s 7.1 per cent.

stanchart to set up software arm in india
new delhi: following the trend by major multinational organisations, standard chartered bank is said to be setting up a subsidiary for providing back office transaction and data processing, software development and maintenance services to the bank’s operations in india and abroad.

the bank also proposes to undertake processing activities for its global operations through this subsidiary, which would act as an independent company. initially, it would provide high quality value added services to the standard chartered bank operations in india, south and middle east. the new subsidiary would not undertake any banking or fund-based activities.

the bank believes that, with the convergence of technology and finance, knowledge-oriented processes had become key drivers for determining success, especially as financial products had increased in their sophistication and complexity. in order to manage such sophistication, the transaction systems should be robust, according to the bank sources.

several other companies are also eyeing india as an it hub for setting up their global processing units and administrative centres for their parent companies. this will enable foreign companies to cut down their total costs by 20 to 30 per cent.

iba gets new chief in mr. k c chowdhary
mumbai: the appointment of mr. k. c. chowdhary as the new chief executive of the indian banks association in place of mr m n dandekar, who completes his term next month, has ended the long search for a person to head the organisation. mr. chowdhary is the former chairman of central bank of india.

the exercise, which began six months ago, included efforts by a search committee, a head-hunter agency and advertisements in domestic and international publications. the association has also been trying to recruit people at general manager levels, but the absence of lateral mobility in the banking industry makes it difficult for an executive to rejoin the industry at the end of his term.

to meet the recommendations of the arthur andersen report, iba is working on a voluntary retirement scheme package for its employees. however, since it is only a non-profit organisation there is no tax exemption on the package. iba is, therefore, structuring a package where part of the ex-gratia payment compensation can be offered in the form of annuity payments for which annuities would be purchased from the life insurance corporation of india.

an advisory committee has been constituted to discuss what needs to be done toward bank restructuring in india. the committee is headed by mr. g v ramakrisha, head of the former disinvestment commission and ex-chairman of sebi.

the iba is also representing to the government on the new maharashtra rent act which does not mention banks. the iba is also planning to make representations on the imposition of stamp duty on lease agreements as banks are also tenants under leave and licence agreements.

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