24 March 2001

Bullion to hit banks by Rs. 70 crore
Ahmedabad: After the share market crisis, it is now the bullion crisis that is going to hit the Indian banking sector. According to the apex bank, Reserve Bank of India, nationalised banks are understood to have suffered losses to the tune of Rs. 70 crore.

Of this, SBI has suffered a loss of Rs 41 crore; StanChart Bank, to the tune of Rs 16.60 crore; Bank of India, about Rs 5 crore; and Punjab National Bank, of about Rs 7 crore. Almost all these banks, except PNB, have issued gold physically against bankers' cheque from the failed Classic Co-operative Bank.

The problem arose from the account of the co-operative bank's leading gold dealers. The dealer had been taking gold from nationalised banks on the basis of pay orders issued by Classic Bank. For a period in the first week of March, the bank had got carried away by its zest to retain the dealer as a client and issued pay orders without the dealer having any funds in his accounts. As a result of this, Classic also faced a funds problem and the bankers' cheques could not be honoured.

The nationalised banks erred in physically delivering the gold without waiting for the proceeds of the bankers' cheque to be realised.

RBI concern forces ICICI to merge three subsidiaries
Mumbai: Prompted by the Reserve Bank of India's direction to bring down the total number of subsidiaries due to supervisory reasons, leading financial institution, ICICI, has decided to merge three of its subsidiaries.

ICICI had 27 subsidiaries after the bank ceased to be a subsidiary this week. If the proposed merger comes through, the number will fall further to 25. The fact that the institution has a large number of subsidiaries is said to be one of the reasons the apex bank has refused to clear its proposal for a non-life insurance company.