Controversy marked Indian banking sector in 1999

NEW DELHI, Dec 26: The intensity of financial sector reforms was brought to the door steps of the Indian banking industry even as the CII and Verma report on weak banks created a lot of debate during 1999 when there were talks of reducing Government stake in public sector banks including the country’s largest bank State Bank of India.

But the major issue was the Confederation of Indian Industry report on weak banks —Indian Bank, UCO Bank and United Bank of India — which had to be withdrawn after the banking sector hit back at the chamber alleging a number of member companies of CII including its President Rahul Bajaj had been defaulting in the loan repayment to these lossmaking banks.

This was only the beginning of the controversy between the banking sector and the industry as the banks stated that the large amount of Non-Performing Assets of over Rs 50,000 crore was from the private sector.

For the workers, it was the bread and butter issue which saw a spate of strikes and demonstrations being organised in various parts of the country culminating in the wage accord for the bank officers. The accord with bankworkmen is also expected to be reached soon.

At a time when talks of privatisation were ringing in at the board rooms of banks, north block and RBI, the Indian banking sector was plagued with a series of problems in 1999 with reduced spreads along with decline in profitability.

To emerge as a global player the banking sector initiated restructuring exercise by shifting from its core business of fund-based activities to fee-based activities in line with the international norms, cost cutting measures and reduction in the Non-Performing Assets, which affected their bottomline during the year.

While the first phase of the banking sector reforms focussed on privatisation, the second report of Narasimham Committee, submitted this year, suggested dilution of the Government stake below 50 per cent.

The Y2K, which was of concern to the entire world, was also the on focal point for the banks as they all geared up to face the problem and by the middle of December, 73 out of 102 banks had become Y2K compliant.

Following on the privatisation agenda and build bigger and strong banks, talks of merging the State Bank of India with its seven subsidiaries were initiated.

While there were talks of consolidation of SBI and its subsidiaries, HDFC Bank announced to merge times bank with it, a step which surprised the entire banking industry as both the banks are profit making and running successfully. The merger and acquisition was also witnessed among the foreign banks with Dutch bank Abn Amro taking over the consumer banking business of Bank of America.

In the era of increased mergers and acquisition, the private sector Tamil Nadu mercantile bank was back to its original promoters - the Nadar family - which bought back over 80 per cent stake in the bank from C Shivasankaran for over Rs 200 crore.

Close on the heels to dilute the Government stake, SBI announced to tap the overseas markets through global depository receipts along with the domestic float to raise Rs 3,000-4,000 crore. This would reduce the Government stake in the bank but require amendment in the SBI Act.

On one hand when there were talks of consolidation, the industry was bogged down with huge losses and rising Non-Performing Assets. To cut the losses and revive the ailing banks, RBI appointed M S Verma panel on weak banks which came out heavily on the state owned banks as it highlighted the shortcomings of the majority of the public sector banks. The committee under the chairmanship of the former SBI chief came out critically saying that there were very few strong banks in the country.

Just as the heat of the Verma committee report was yet to be over, Confederation of India Industry came out with a similar report but suggested closure of Uco Bank, Indian Bank and United Bank of India. But within a week the chamber had to withdraw the report amidst high level of controversy including a debate in the Parliament. (PTI)

BHEL designs automated system for accurate
loading of petro-fuel

NEW DELHI, Dec 26: To check large scale pilferage and wastage of precious petroleum, Bharat Heavy Elecrticals Limited (BHEL) has successfully designed, developed, manufactured and commissioned an automated system for accurate loading of petro-fuel in wagons and trucks.

The highly efficient system, developed indigenously by the company’s Research and Development (R and D) division at Hyderabad, is called ‘petroleum bulk loading terminal automation system.’ The system will help in conserving petroleum which is the biggest drain on foreign exchange reserves in the country.

The successful commercialisation of the automation system, part of the company’s strategy of diversifying into new areas using its existing facilities, marks BHEL’s entry into a new, remunerative line of business.

The first such system has been commissioned on a turnkey basis in just nine months, by the company’s Industrial Systems Group (ISG), Bangalore, at Indian Oil Corporation’s (IOC) Sanathnagar Depot in Hyderabad.

The system can be installed at bulk petroleum loading depots to accurately fill present quantities of petrol into wagons and trucks. It is far more precise and efficient than the conventional system of manuamanually measuring the quantity of petrol filled and greatly enhances the productivity of filing operations at depots. It also reduces the number of people required for the the job, besides reducing the time taken in manual loading.

Reposing confidence in BHEL’s capabilities, IOC has placed major repeat orders for similar tank terminal automation projects at Sanathnagar, Barauni in Assam, Irumpanam in Kerala, Nishatpura in MP and Miraj in Maharashtra, Hindustan Petroleum Corporation Limited (HPCL) has also placed an order for a tank terminal automation system at Sabarmati in Gujarat. All these orders, cumulatively worth more than Rs 20 crore, have been bagged in the face of stiff competition.

The new loading system also has a provision for filing operations at a number of points, from a single computer, through a remote control, besides, it can automatically record the exact quantity of petroleum being filled into tankers. (UNI)

BCL will upgrade its existing cement plants

DURGAPORE, Dec 26: Birla Corporation Limited (BCL) will upgrade and modernise its existing six cement plants located in various parts of the country, according to Mr K C Mittal, Managing Director of the Durgapore Cement Works, one of the units of cement division of Birla Corporation Limited, said here today.

Speaking to newsmen after the silver jubilee celebration function here Mr Mittal said the cement division of BCL was now having a capacity of four million tonnes cement production per year. After the modernisation, which was likely to be completed within the next one year, the total capacity of the cement division of BCL would go up to five million tonnes.

Mr Mittal said for the modernisation programme the company would have to spend an additional expenditure of Rs 1300 crores Mr Mittal said and added that this expenditure for the modernisation would be met up from the company’s own resources, financial institutions and the fund the company accrued from the recent rights issue made by the BCL.

Mr Mittal said the entry of multinationals in the cement market of the country like la-farge who has embarked on an aggressive marketting strategy in India had put the Indian cement producers under great pressure. He said BCL had to sell the cement at a much lower price than their production cost to compete with the foreign companies.

However, Mr Mittal felt things would brighten up soon and hoped that things would take a brighter shape within the next three months when the demand for cement was expected to go up. "We would have to sustain the loss for sometime now. But we would be able to turn the tide in our favour soon," Mr Mittal added.

Mr Mittal said the location of Durgapore cement works offered strong marketting advantages to the consuming areas of West Bengal and North Eastern states. Freshness of its products had endeared both the DCW brands- Birla Cement Samrat, and Birla Cement Durgapur to the consumers. Birla Cement Samrat, developed after research as a high performance slag cement, was Durgapur cement works’s silver jubilee gift to the nation, he said. He said that DCW’s cement was also popular in Bangladesh under the brand name of Royal Bengal Tiger.

Earlier, at an well attended and colourful function chairperson of BCI, Mrs Priyamvada Birla urged the workers to renew their committment to excellence taking careful note of the voice of the market. She said that powerful foreign players were entering the cement business making it imperative that only the fittest would survive. Mrs Birla was confident that her dedicated team of workers would able to take the challenge and emerge winners.

Mrs Birla also inaugurated a silver jubilee booklet published on the occasion. Dcw on the occasion also felicitated 18 of its employees who are with the company since its inception.

Mr Dilip Majumdar, president of CITU affiliated DCW Workers Union and Mr Apurba Mukherjee, president of INTUC affiliated DCW Workers Union urged for more meetings between the workers and management for better performance and assured all help for the betterment of the company. (UNI)

| home | state | national | business| editorial | advertisement | sports |
| international | weather | mailbag | suggestions | search | subscribe | send mail |