While some large companies have certainly been affected by the truckers strike, your neighbourhood grocer may have a different story to tell. One of them tells me that the strike has barely had a 1 per cent impact on his business. Why? "It’s a matter of survival," he says. Supplies are being made in small vans, taxis, auto rickshaws and even on bicycles, because nobody can afford the loss of income. Mumbai’s many idle taxis are also happy to cash in on the opportunity. The only difference is that goods are supplied between 9 p.m. and midnight. Clearly, Mumbai-wallahs have decided that business has to find a way to go on.
The State Bank of India, one of the largest shareholders of the BSE-promoted Central Depository Services (India) Limited (CDSL) has called for an emergency meeting to seek the removal of its MD B.G. Daga. The CDSL chief has been under a cloud ever since an inquiry report on the Calcutta Stock Exchange (CSE) payment crisis criticised his role in a bailout deal while he was a top executive at UTI. SBI is understood to have said that good corporate governance demands that Daga cannot continue to head the CDSL; other bank shareholders may follow SBI’s lead and force him to quit.
The Indian capital market may want to march towards global systems, but the banking sector continues to hold it back. Interestingly, it isn’t the banks’ fault either. When the government declares a holiday under the Negotiable Instruments Act, banks have no choice but to remain shut. So, while stock exchanges have cut holidays to the minimum, trades cannot be settled unless banks are also open. Last week, the efficiency of the T+2 settlement was rendered meaningless because bank holidays forced three settlements to be bunched together. Brokers cannot even make payments when banks remain closed. Isn’t it time the Reserve Bank made a push to get banks out of the disruptive tyranny of excessive holidays?
Public v/s Private
If public sector banks are feeling complacent that an ICICI Bank-type run will not happen to them, they may be in for a nasty surprise. A quick poll would probably reveal that most depositors believe ICICI Bank is a public sector organisation. Forget ordinary depositors, even a few bureaucrats and financial sector experts were ignorant about ICICI’s non-government status until a few months ago. If there was no run on Indian Bank in the past, when its net worth was wiped out twice over, it is only because it predated the UTI debacle and depositors were not subjected to the same panic and agony as unit holders. The next time may be very different.
Last Thursday, the Bombay Stock Exchange (BSE) called an emergency meeting of its board of directors to rescind the appointment of Praveen Mohnot as Chief Operating Officer (COO). Mohnot, an employee of the Unit Trust of India (UTI) was former MD of the OTC Exchange of India on deputation from UTI. The BSE was forced to call the meeting after UTI took serious objection to Mohnot’s appointment and pointed out that it had not accepted his resignation pending an inquiry against him under its conduct rules that could lead to disciplinary proceedings. Interestingly, even before the meeting got underway, the Securities and Exchange Board of India (SEBI) issued the BSE a rare directive to cancel Mohnot’s appointment. The BSE had taken Mohnot on board in defiance of an informal suggestion by the regulator that it would not approve of his appointment. Interestingly, BSE sources say that Sebi’s suggestion was never communicated to the board of directors.
Drug MNCs frauds
Last week alone, two blue chip MNCs joined the list of corporate fraudsters. The pharma giant Bayer AG, agreed to pay the American government $257 million after pleading guilty to a criminal charge involving a scheme to overcharge the Medicaid programme for the antibiotic Cipro. The fraud was exposed by an unnamed whistle-blower, who told the authorities how Cipro was relabeled and sold to Kaiser Permanente with a different drug identification number, to be able to charge more money. But Bayer is apparently not alone in the re-labelling racket. GlaxoSmithKline also agreed to pay $87.6 million in settlement of a civil charge that it overcharged the American Medicaid programmed for Paxil, an antidepressant and Flonaise, an allergy spray. Both companies were selling the over-priced products to Kaiser, but the American federal regulators have not charged Kaiser with any wrongdoing
-- Sucheta Dalal