7 september 2000

vsnl gains rs 700-cr compensation for losing monopoly
new delhi: the union cabinet has finally decided to end the monopoly of videsh sanchar nigam limited (vsnl) in international voice telephony. the cabinet has approved that private players will be allowed in this arena from april 1, 2002, two years ahead of schedule. it has also decided that vsnl will be compensated with a rs 700-crore package, for this early truncation of its monopoly.

as part of the compensation package, the state-owned company has been allowed to enter the national long-distance service without paying the required license fee of rs. 100 crore. also waived is the condition of revenue sharing with the government. vsnl has been exempted from sharing any revenues for the first five years.

the government has appointed salomon brothers to evaluate the compensation package. if the evaluation states that the compensation is not enough, the government may be ready to share part of the revenue earned from private international operators.

rbi allows top nbfcs to become banks
mumbai: in a major move, the reserve bank of india is set to allow select top non-banking finance companies to convert themselves into banks. such companies will be required to put in applications in accordance with the new bank licensing norms, which are likely to be out over the next few days, unlike financial institutions, which could convert themselves into banks directly by moving the rbi.

the finance ministry is said to have approved the proposal and it will be part of the new bank licensing norms. the original licensing norms for the new banks did allow nbfcs to float banks. the new policy will allow nbfcs to convert themselves into banks provided they fulfil the very stiff criterion.