Sucheta Dalal :Catching up with the custodian (3 December 2001)
Sucheta Dalal

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Catching up with the custodian (3 December 2001)  

After hibernating for seven odd years, the custodian appointed under the Special Courts Act has become extremely busy indeed. On Thursday, the custodian moved court to stop the sale of property worth Rs 64 crore by the Killick Nixon companies to Global Trust Bank, after it was brought to its notice that the companies belong to a notified party—T B Ruia who is committed to pay up the same sum to the custodian. It also notified 11 more entities for the 1992 scam—they include Ajay Kayan and Shyam Sunder Dalmia who are powerful heavy weights of the Kolkata stock market. It also notified Dhyan Investments—which used to be an investment subsidiary of the Reliance group in 1992 and has since been spun off. Having notified 15 new entities in just over six weeks, the custodian is now busy defending its actions in court. Several weeks after the notification, the custodian is still to clarify whether its order freezes all assets of the notified parties until the date of notification or only for the period April 1, 1991 to June 6, 1992. This has led to some strange situations. For instance, in one case, the notified party told the Court of Justice Palekar that the claim against him was a mere Rs 5 lakh. Even after compounding interest on this sum at the highest rates, the claim would not exceed Rs 30 lakh, yet all assets of the person have been notified until the year 2001. Justice Paleker granted some immediate relief to the person, but it leaves one wondering whether the ambiguities and absurdities are meant to cause confusion or aid the scam investigation.

Getting it all wrong

It is strange how India’s number one exchange—which single-handedly dragged the Indian capital market into the era of automation, technology and international best practices, still cannot get its official website to work. Earlier the ticker tape on the National Stock Exchange (NSE) website used to freeze when you logged on; now it keeps moving but clearly cannot handle the strain —so the numbers and characters have all clashed together into one undecipherable mess. So you have a moving tape, but still can’t get the quotes. The good news is that the NSE wants you to write in and give it all the feedback. In fact, it has this huge window, which pops into your face and covers the screen almost beseeching you to write in with your suggestions. But it is not so easy. Try doing it and you find your comments rejected unless you are willing to fill out a lengthy form seeking a load of biographical data. Naturally, you exit without bothering with the feedback and NSE probably thinks it has a great website. Surely it should know that let alone feedback, most surfers are extremely reluctant to part with personal information even when they are registering for a much needed service.

Swadeshi agenda

The Swadeshi Jagran Manch has found something to cheer in the World Bank’s world developmental report, which identifies the Gounder community of Tirupur for special mention (pg. 175). It points out that Tirupur, which developed into a huge international centre for knitted garments in the 1990s, owes its success to the unique informal financing system of the Gounder community which had succeeded where the state banking monopoly had been ineffective. Knitted garments are a capital-intensive business and the high growth rate at Tirupur made it even more capital-hungry. This capital was raised within the Gounder cast using family and community networks through long established informal credit institutions, rotating savings and credit associations. The report says that ‘these networks were viewed as more reliable in transmitting information and enforcing contracts than the banking and legal systems that offered weak protection of creditor rights’. Moreover, the intense competition in the garment industry ensured that good money would not follow bad, and that firms would pay attention to the needs of customers. Further, once the Gounder network stimulated trade, it also allowed outsiders to access the formal financing systems and exploit newer opportunities at even lower costs and better economies of scale. It points out that instead of using caste merely as a political tool it would also be exploited to spur economic growth in the community and country.

TAILPIECE: The Reserve Bank of India’s decision on increasing the limit for endorsement of foreign exchange on passports will be a big relief for those who want to buy it at the airport. There is only one counter run by the State Bank of India, where one waited for 45 minutes in a queue of three and realised long after changing the money that the staff forgets to return any change below Rs 100.

-- Sucheta Dalal