RBI slow in suggesting steps to make laws stringent: JPC

NEW DELHI, Oct 26: The Joint Parliamentary Committee (JPC) inquiring into last year’s stock scam has hauled up the Reserve Bank of India for being slow in suggesting legal changes to inculcate fear among perpetrators of financial crimes.

"It is disheartening to note that the Reserve Bank of India has been rather slow in suggesting various amendments to the existing acts with a view to make the existing laws more strong and punitive in nature," said the draft report of the JPC, which is to be finalised soon.

Stating that RBI Governor Bimal Jalan had conceded during the hearing that the present our system is "non-functional", the JPC said it looked the existing laws do not inculcate a sense of fear among the wrongdoers.

The JPC, inquiring into 2001 stock scam and the temporary freeze on UTI’s flagship scheme US-64, also pulled up the apex bank for not effecting some of the suggestions relating to the banking sector made by the previous JPC set up in 1992.

"The amendments to the Public Debt Act, 1944, for instance, which were reported to be under process as per the action taken replies furnished way back in 1994 in response to the recommendations of the earlier JPC, are yet to be effected", the report said.

The committee said though some of the penal provisions under the banking regulation act, 1949, in the case of commercial banks and as applicable to the co-operative banks are required to be enhanced further, the proposal to this effect has not been mooted by the RBI.

The JPC said though it appreciated the steps taken by RBI from time to time on supervision or other safeguards, no amount of rules, regulations and guidelines can ever stop the aberrations in any financial system unless the regulator is ever vigilant and is able to act with due promptitude.

It said most importantly the legal framework should be such that provides for strict laws which are enforced expeditiously so that a sense of fear is created in the minds of the wrongdoers.

It said the failture in the case of Madhepura Mercentile Co-operative Bank (MMCB), however, poses a serious question mark on the efficacy of the supervision which is currently in place, particularly, in urban co-operative banking sector.

"Moreover, scrutiny of inspection reports of various banks shows that while at the higher echelons of rbi, there is a paradigm shift to qualitative factors, ground level inspecting officials are still transaction based in their approach," it said.

"This combined with the system of filling various heads and sub-headings prescribed in an inspection report, leaves the bank level qualitative appraisal of systems completely absent," the jpc said.

The committee also asked the government to clear the proposals forwarded by the RBI to the finance ministry on some critical issues.

"The committee deplores the half-hearted and casual manner in which these critical matters have been dealt with and desires that particularly in the present environment, where the financial markets are getting integrated, a thorough review is made of the existing laws and at least the proposals which have been forwarded by the RBI to the Ministry of Finance, must be cleared expeditiously". (PTI)

‘India in danger of collapse if finances not managed well’

NEW DELHI, Oct 26: India could go the Soviet Union way if its economy was not managed well particularly its finances, Disinvestment Minister Arun Shourie warned today.

"We may have atomic weapons but if we do not manage our Governmental finances well, US foreign exchange reserves slip and have to turn to the IMF, we will be squeezed into submission," he said delivering the prestigious Cariappa Memorial lecture on `Forging a national will’ here.

"We will be vulnerable and not in spite of our atomic weapons but because of them. The way the Soviet Union collapsed yesterday, the way Russia and Pakistan can be pressurised today are ready warnings," he said

Holding that the system had become "dysfunctional" in carrying forward economic reforms, Shourie said the central weakness was general governance and unless it was remedied the economy would be overwhelmed.

"Our system is just not able to deliver. It has become dysfunctional," he said in the lecture for which Deputy Prime Minister L K Advani was the chief guest.

"Labour reforms, privatisation, reforms of the financial sector, reforms in the power sector... What have we not announced in the last decade? for which of them have we not in the last decade pledged ourselves to time-bound targets. Yet on everything a 20-metre sprint and inertia overwhelms us," he said.

Warning that vices that had come to infect general governance cannot but also infect the armed forces, the minister said the defence sector could not remain an island forver in inertia.

"Can it be that corruption in civilian life will become as pervasive as the very air that we breathe but that affairs touching defence forces will remain pure", he asked

He said it cannot be that delays would mar all governance and defence purchases could be executed on time.

Comenting that the higher command in the country’s system remained in the hands of those who had come up through the same political system, the minister said day to day decisions about the defence still remained in the domain of the political and administrative establishment, which had a bearing on the morale and the fighting ability of the forces.

Declaring that defence forces were to the country what an iron railing around was to a tree, he said the fence will not be able to save the tree, if the tree has been hollowed by termites from within".

"This constitutes the central threat to our security in the coming decades— the crumbling of the scaffolding of the state— and is the one all of us —soliders and others— must work together to remedy," Shourie said adding that defence forces were in fine fettle and the task was to get general governance upto their standards. (PTI)

Cabinet to consider ordinances on UTI and SEBI on Monday

MUMBAI, Oct 26: The long-awaited ordinances to split UTI into two and to give limited search and seizure powers to market regulator SEBI will be considered by the Union Cabinet on Monday, Finance Minister Jaswant Singh announced today.

He also announced that the broad thrust of the forthcoming budget will be announced in the winter session of Parliament as part of the efforts to make budget-making more transparent from this year.

"I hope to present a mid-year budget position of the country to Parliament in November session and along with that we will indicate markers for the future. This will be put on the Finance Ministry website," Singh said addressing Bombay Stock Exchange on his first visit to country’s commercial capital after taking over as Finance Minister.

Singh also said that the Government would take a decision within four weeks on Justice Kania panel report on demutualisation of stock exchanges.

On the establishment of a central listing authority, he said a decision would be taken within 30 days. The securities appellate tribunal would be made a multi-member body and would include retired supreme court and high court judges as members.

As already announced UTI is to be split into two —UTI-i comprising US-64 and the assured return schemes and the UTI ii comprising net asset value based schemes. For this repeal of UTI act is essential and is to be done through an ordinance.

Singh said the task force on indirect tax reforms which submitted its report yesterday would be placed on the Finance Ministry website on Tuesday for eliciting public opinion. The task force on direct tax reforms will be submitted on November two, which too would be made public. Both the task forces are being headed by his advisor Vijay Kelkar.

Singh said the Finance Ministry has asked SEBI and Reserve Bank of India to work closely to implement "T+1" settlement cycle for the capital market as early as possible.

"I am trying to encourage them to make it functional earlier than the set date in 2004", he said in his first interaction with the broking community.

Referring to screen based trading in Government securities, the minister said such transactions would be permitted in this fiscal itself.

On the issue of turnover tax on the brokers, he said the Government was bound by certain judgements of Supreme Court and "the broking community will have to wait till the reports on direct and indirect taxes are submitted to the Government". Stressing that there was no alternative to free market and reforms, Singh said "free markets along with stronger regulatory mechanism is necessary for effective functioning of the system".

Without a strong regulatory framework, "we will have incidences/issues arising like vast amount of non-performing assets (npas), which is a crime committed on the citizens of India", he said.

Singh said dynamic capital markets were necessary for economic growth and "Government is committed to promoting healthy competition and not monopolies".

Earlier, BSE non-executive chairman D R Dhanuka said the exchange was facing competition and some people are trying to malign the image of BSE. "In crisis, we are open to discussions with SEBI", he said.

The process of demutualisation should be stepped up for benefit of the exchanges, he added. (PTI)

India’s foreign exchange crosses USD 64 billion

MUMBAI, Oct 26: India’s foreign exchange reserves rose to a record high and crossed US dollar 64 billion during the week ended october 18 following revaluation of the US dollar vis-a-vis euro and fresh inflows.

Foreign exchange reserves rose by USD 126 million during the previous week at USD 64,058 million, according to the weekly statistical supplement issued by the Reserve Bank of India here today.

Foreign currency assets during the week ended October 18 rose to USD 60,748 million, a jump of USD 126 million, RBI said.

Special drawing rights and gold remained static at USD 10 million and USD 3,300 million respectively.

Loans and advances to State Governments declined by Rs 531 crore at Rs 5,385 crore, the RBI said. (PTI)

Punjab to spend Rs 109 cr under ‘Sarv Siksha Abhiyan’

HOSHIARPUR, Oct 26: To improve the basic education scenario in Punjab, the State Government will spend Rs 109 crore under the ‘Sarv Siksha Abhiayan’ scheme, State Education Minister Khushhal Behl said today.

"The main aim of education is to make the younger generation self-employed due to which job-oriented education is being introduced in the state", he said addresing the silver jubilee celebrations of Doaba Public School at Parowal near Garhshanker.

The minister said said class I to VIII would be separated from Secondary Education by constituting an Elementary Board.

"Rural primary schools will be attached with the middle schools of their respective villages," he said. (PTI)

Centre to help Haryana in setting up Wide Area Network

CHANDIGARH, Oct 26: Centre would extend all possible assistance to Haryana in setting up wide area network within next two months to provide on-line services to the people of the state, Union Information Technology Secretary Rajiv Rattan Shah has said.

While reviewing the progress of e-governance projects in the state, Shah lauded the work done by department of information technology and NIC, an official release said here today.

Speaking on the occasion, Financial Commissioner and Principal Secretary Information Technology Dharam Vir said the IT Department was preparing a portal to provide information on pensions, GPF, loans and advances.

Besides, a single window portal was being developed for submitting applications and periodical returns to the Departments of Industries, Environment and Labour and Pollution Control Board.

He said it had also been decided to set up foodnet to connect all the agencies involved in procurement, distribution and management of foodgrains.

The police network was being established on the Turnkey basis which would link all police stations and range, district and state headquarters, he added. (PTI)

RBI panel says no new LAB licences should be given

MUMBAI, Oct 26: A Reserve Bank of India appointed review committee on Local Area Bank (LABs) scheme has recommended that no new licences should be given till the existing ones are placed on a sound footing.

The committee, headed by former Finance Secretary G Ramachandran, in its report said since some LABs have only recently started functioning more time was needed to be given to observe their performance.

Suggesting that LABs should be treated on par with cooperative banks in the matter of opening of branches, the panel felt that other restrictions should be waived and the branch opening should be subject only to the granting of a licence by the Reserve Bank of India.

LABs need to be treated like any other commercial bank and hence regulation and supervision should be entrusted to the same wing of RBI, which is responsible for commercial banks, the apex body said in a release here today.

To make a LAB viable, the panel felt they should have a net worth of Rs 25 crore and capital adequacy norm of 15 per cent to build an asset base of about Rs 150 crore at which their operations would become viable.

Each of the existing LABs should be asked to submit a suitable road map for achieving these twin objectives, it said.

Considering the risks involved, LABs should be prohibited from trading in Government securities and other papers for five years and also not be permitted to engage the services of agents for achieving their business outreach, it added. (PTI)

Rs 500 crore IT park to come up in Punjab

CHANDIGARH, Oct 26: In an effort to boost the information technology sector in the state, Punjab Government has signed an MoU with Quark Media to set up an IT park at Mohali.

Punjab Information and Communication Technology Corporation Limited (Punjab Infotech) signed a MoU with the company in the presence of Chief Minister Amarinder Singh yesterday, an official release here said.

Speaking on the occasion, Singh said the entire investment of Rs 500 crore for the project would be made by the quark group from its own sources. The project would provide built in space facility with un-interrupted power supply, satellite connectivity and air-conditioned office space, where the companies could immediately start their operations, the release said. (PTI)

Gold rises further on firm NY advices

MUMBAI, Oct 26: Gold rose further on the bullion market here today due to increased stockists’ buying helped by firm New York advices.

Silver showed fresh rise in line with gold along with emergence of industrial buying.

In New York, gold rallied on friday by USD 2.70 an ounce to USD 313.90 on frantic spculative buying due to weak US economic data along with subdued US equity trend, traders said.

In the local market, standard gold resumed firm at Rs 5160 and on persistent support managed to hold that position till the end of the session, showing a good gain of Rs 20 over the previous close of Rs 5140.

Ten-tola gold bar (.999 purity) also opened strong at Rs 60,400 and later, closed at the same level, revealing a handsome gain of Rs 200 over the last close of Rs 60,200.

Ready silver (.999 fineness) opened better at Rs 7735, but eased marginally towards the fag-end in the absence of necessary followup support and ended at Rs 7725, still showing a fresh rise of Rs 15 over the previous close of Rs 7710.

Following are today’s closing rates with previous rates in brackets.

Ready silver .999 (per kilo) Rs 7725 (Rs 7710), standard gold (ten gram) Rs 5160 (rs 5140) and ten-tola gold bar .999 Rs 60,400 (Rs 60,200). (PTI)

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