A decade after a flood of dubious Initial Public Offerings (IPOs) robbed people of their savings and vanished, the primary market seems set for another revival. Out of the several hundred vanished companies, the Registrar of Companies (ROC) in Mumbai has finally filed eight complaints with the Economic Offences Wing of the Mumbai police. But there is still a problem. According to police sources, these are all companies where the ROC apparently does not have a single investor complaint. This means that there is little that the police can do unless investors come forward to demand their money back. The eight companies are: Realtime Finlease, Sparkle Foods, Ichalkaranji Soya, Hitesh Textiles, Caldyn Aircon, Vipul Securities (was compulsorily delisted in 2004), AVI Plantation and Floriculture (there is also an AVI Exports India Ltd, which was delisted by the BSE) and Pashupati Cables. All these companies are debarred from accessing the capital market by Sebi. Investors who have shares in these companies or are otherwise owed money by them and their promoters must write to the Economic Offences wing or to this newspaper.
Given that Finance Minister P. Chidambaram forgot to take credit for the hurriedly launched Indonext (a project announced in his previous budget) and did nothing to sort out the mess in the debt market, it was curious to find that the Securities and Exchange Board of India’s (Sebi) plan to set up ‘‘a National Institute of Securities Markets for teaching and training intermediaries in the securities markets and promoting research’’ came in for special mention. Like the MAPIN database for unique identification numbers, the institute was another of those ambitious but secret projects pursued by former Sebi Chairman G.N. Bajpai, and with an equally vague utility. The difference is that Bajpai was looking at an ‘international’ institute for capital markets with an international board of directors, rather than the ‘national’ institute mooted by the FM. M. Damodaran, who has been with the Unit Trust of India and Industrial Development Bank of India, is now the Sebi chairman. UTI had set up the Indian Institute of Capital Markets and the IDBI-funded the Jawaharlal Nehru Institute of Development Banking (JNIDB). The former is struggling to become a separate profit centre and could easily meet Sebi’s training needs — there is no for another institute. And with development banking losing its relevance, the JNIDB’s spectacular campus at Hyderabad can be surely accommodate any other training needs that Sebi may envisage. It remains to be seen if the new chairman also shares the usual public sector penchant for building lofty sounding training institutions at taxpayers’ expense.
No ATM payments
The finance minister (FM) seems to believe that tax-paying investors will not object to paying a 0.1 per cent cash withdrawal tax, if they want to continue drawing Rs 10,000 of cash at a time because this category of people are already used to paying hefty chargers to banks for using ATMs, for demand drafts, outstation cheques etc. Clearly, someone is misleading the FM. None of the banks charge any money for cash withdrawals from ATM machines, unless the account holder has failed to maintain a minimum balance — and even then some withdrawals are free. The only time that ATM users pay for cash withdrawals is when they use a shared ATM of another bank and not the one in which they have an account — they then pay a switching charge. As for other services — such as demand drafts etc — private banks charge much higher rates and this has in fact pushed some depositors back to public sector banks. In fact, if the finance minister wants audit trails to peoples’ spending then he can create incentives for the use of plastic money. He must also target jewellery shops and consumer durable sellers who either do not accept credit/debit cards or charge a higher fee for card payments.
Assurance of action
A few weeks ago, Oriental Bank of Commerce (OBC) said it had filed complaints against five companies to recover loans by the defunct Global Trust Bank (GTB). These are in addition to five others where it had earlier filed complaints with the Central Bureau of Investigation. They are PEPCO, Pearl Distilleries, Shonkh Technologies, Unitel Software, Business India Publication. Curiously enough, the remaining five are being kept a secret. However, informed sources say they include Himachal Futuristic, Zee Telefilms, Pentamedia, the Balaji group and Lloyd Steel, which collectively owe GTB around Rs 400 crore. Three of these formed a part of what were known as the K-10 scrips in 2000. Interestingly, despite an assurance by the FM to Parliament that action will be launched against Ramesh Gelli and the promoter group of GTB — were responsible for its collapse, there is no move to initiate any such action by the Centre or RBI. Instead, a former GTB auditor PriceWaterhouse has been made scapegoat, and the matter is sought to be buried.