Different Strokes

Having stood by and allowed the bank to be taken over by Vinod Baid of the Prudential group, the RBI has discovered that it has lent several hundred crores of rupees to various firms of the promoter group. Very similar to Bank of Rajastan8217;s reckless lending to the Bangurs. Bank of Sikkim has also lent money to Prudential Capital Markets which had created a scare by delaying repayment to fixed depositors, soon after the CRB group collapsed. Prudential stock broking is also deeply in the red, having incurred big losses through excessive speculation in June last year on account of the big bull operator. As usual, SEBI is still to complete its probe and act against brokers and companies involved in the crises.

Selling off the depository

Anand Rathi, the new BSE chief, has the knack to convert adverse situations into positive ones. Andhe is using the skill to get the BSE out of sticky situations that his predecessors had created. The BSE has invested almost all its reserves into its trade guarantee fund and depository and was in danger of sliding into the red. It is the interest earned on these funds that used to cover the BSE8217;s operating costs. And Rathi certainly does not intend to head a loss-making exchange. So his solution is to have the BSE divest its entire 66 per cent holding in favour of banks, FIs, other bourses and depository participants. In fact, the sooner the connectivity issue between the two exchanges is resolved, the faster will the BSE be able to find buyers to offload its equity. Moreover, divesting its stake at this stage will ensure that the BSE does not have to worry about the viability of the Central Depository of Shares Ltd. The National Share Depository Ltd is making it abundantly clear that it plans to compete fiercely for every bit of the depository business and harm CDSL8217;s viability by dropping depositorycharges even further. In other words, it makes eminent sense to get out while the going is good. At the same time Rathi8217;s demand that banks, insurance firms and PFs invest money in equities is frightening, at a time when UTI has shown that six years of reckless investing can wipe out 35 year of goodwill.

They protest too much

Bank depository participants are apparently planning to lodge a protest against the SEBI directive asking them not to link depository accounts to savings accounts and coerce investors to maintain minimum balances. The banks plan to approach SEBI through the Indian Banks Association, but they are not protesting too much. Investor groups have alleged that forcing them to maintain balances is a restrictive practice. But there is nothing to stop banks from charging more to investors who want a stand alone depository account and offering a much lower price to those who opt for the linkage to a savings account. NSDL officials also support the banks8217; argument. It is also clear thatmost investors would prefer to open a savings account once they perceive that it is cheaper and more convenient. But SEBI is correct in insisting that investors be given the choice. They should not be coerced to perceive the advantages of the paperless environment, and that8217;s not easy. For instance, a odd-lot share of HLL are apparently at a discount of Rs 100 to Rs 125 a share instead of quoting at a premium due to the convenience of trading.

The big F bites the dust

While on HLL, the company has withdrawn its raunchy campaign for the Feast bar 8212; but not all. According to the company, only those titled Mate your stick8217; have caused dissonance in the minds of consumers. The big F8217; ads however continue. The exaggerated David Vs Goliath images which reversed nasty experiences of everyday life with eunuchs and eve teasers have startled viewers. Are they fun? Opinion is divided several ways. Some find them fun, others find them amazingly offensive. As for HLL-it hates withdrawing ads even when itsad strategy is a departure form its normally safe and staid family advertisements. Will the big F too bite the dust?

Author8217;s email: suchetadalalyahoo.com