Sunday, September 26, 1999
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B U S I N E S S | Sunday, September 26, 1999 |
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Banks go slow in adopting
RBI norms India to lose $ 3.5 b from WB, ADB |
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China plans to cut import tariff Politics of oil in full play Imported wool hits rabbit farming SBP to loan 7 crore to Himachal
farmers Allahabad Bank opens ‘quick
collection centre’
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Banks go
slow in adopting RBI norms LUDHIANA, Sept 25 — The Northern India Federation of Industrial and Commercial Undertakings has accused certain nationalised banks of dragging their feet on implementing the new guidelines issued by the Reserve Bank of India governing the settlement of all chronic non-performing accounts (NPAs). “It is the old, adversorial mindset of certain officials of these banks more than anything else which is coming in the way of speedy settlement of NPAs, says Mr Kanti K. Behal, President of the federation in a talk with TNS. “Attitude at the top levels in these banks is very helpful but those at the helms of affairs in branches continue to display a Shylock-like attitude and a totally negative approach. And this is despite the fact that the guidelines by the RBI in connection with the settlement of NPAs are clear and unambiguous, leaving no room for doubt of any kind”. The RBI, he says, has been prompt in clarifying that the guidelines apply even to small business including trading and personal segment, and agricultural segments. But many bank managers in Ludhiana and elsewhere in the region are deliberately going slow on implementing these guidelines, locking up hundreds of crores rupees in needless litigation. Mr Manmohan Talwar, Secretary (Finance) of the federation and Mr Tulsi Das Jetwani, President of Punjab Beopar Mandal, point out that the RBI issued the new guidelines in May in view of the fact that the present system and procedures of compromise settlements in banks for recovery of NPAs was long drawn. There was also considerable reluctance on the part of bank officials to take decisions on compromise proposals. As a result, the NPAs of public sector banks contained a very large number of chronic cases. There are as many as 5131 lakh cases filed by public sector banks for amounts aggregating a staggering Rs 23,915.21 crore pending disposal with various courts. The guidelines apply to all non-performing accounts which are chronic and at least three years old as on March 31, 1999 and will be operative only up to September 30, 2000. Cases pending before courts as well as Debt Recovery Tribunals (DRTs) are also covered. The two leaders say that Punjab National Bank has been very forthcoming in implementing the scheme. As a matter of fact, it has gone to the extent of sending circulars to borrowers to come forward for settlement as per the RBI guidelines. Regrettably, the same cannot be said about many other banks. Mr Behal says that there have been cases in which banks have taken the specious plea that since the borrowers had to agreed to pay back loans on enhanced rates of interest before the new guidelines, they were not entitled to avail themselves of the guidelines. In another case, a bank insisted on going ahead with the auction of assets of a borrower even when he offered to pay back the loan amount in accordance with the guidelines. They are, however,
confident that the scheme will eventually be a great a
hit both with the banks as well as the borrowers. While
many of the banks are still in the process of
understanding the nitty-gritty of the scheme, the
borrowers are also in the process of raising funds for
paying back dues. “It is not easy to dispose of
pieces of property because of the ongoing slump in real
estate but this can be done. I am sure that there will be
a long queue of borrowers in front of the banks willing
to pay back by the first week of November”, says Mr
Behal. |
India to lose $ 3.5 b from WB, ADB WASHINGTON, Sept 25 (PTI) — India stands to lose $ 3.5 billion of loan from the World Bank and the Asian Development Bank this financial year due to economic sanctions imposed by G-8 countries in the aftermath of Pokhran nuclear tests. According to the U.S. International Trade Commission, India will get $ 1.95 billion less from the World Bank and $ 1.6 billion from the ADB in the fiscal, 1999, due to the sanctions which bar development loans by multilateral financial institutions. The independent commission whose views were sought by the U.S. House of Representatives’ committee on ways and means, however, said the loss to US corporations will be much more, if the sanctions were persisted over a long-term. The commission’s views were sought in the wake of the Glenn amendment which was activated by the Clinton administration after the nuclear tests in May, 1998. India secured only $ 1 billion of loan from the World Bank this year which is a part of the $ 1.44 billion loan set in motion before sanctions were imposed. The commission cautioned that if the sanctions persisted, the loss of jobs in the USA could run into thousands besides credibility loss to US companies. This assumes significance as Indian Finance Minister Yashwant Sinha will press for early clearance of pending projects during the ongoing Fund-Bank meeting. The commission pointed
out that “India had been scheduled to receive about
$ 3 billion” a year from the World Bank against the
actual approval totalling $ 1.05 billion in the fiscal. |
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MUMBAI, Sept 25 (PTI) — The New India Assurance Co Ltd’s net profit for 1998-99 dropped by Rs 95.94 crore to Rs 375 crore from the previous year’s Rs 470.94 crore on account of non-performing assets (NPA) and losses suffered due to cyclone in Gujarat. New India had to provide Rs 40 crore for NPAs against Rs 11 crore in 1997-98 and also suffered a total loss of Rs 100 crore due to the cyclone, the insurance company’s Chairman and Managing Director S.K. Kanwar told reporters here today. New India’s gross
premium in India increased by 12.15 per cent to Rs 2,729
crore in 1998-99 from Rs 2,433.73 crore in 1997-98 and in
the current, the growth has been 11 per cent. |
China
plans to cut import tariff NEW DELHI, Sept 25 — China plans to reduce its import tariff in a phased manner and by 2000 its average tariff rates are expected to be lowered from 17 per cent to 15 per cent. The Chinese Ambassador to India, Mr Zhou Gang, said here today. Addressing a seminar on “Doing business with China”, organised by the PHDCCI, Mr Zhou Gang said China would deepen the structural reform of foreign trade to establish a new foreign trade system in conformity to the requirements of socialist market economy and internationally accepted practices. On the basis of further improving the export administrative system, China will accelerate the reforms of import administrative system to adjust its imports mainly by application of legal and economic means, he added. He said overseas investment would be encouraged, especially in agriculture, high and new technology industries, basic industries, and infrastructure. Opening service trade would be expanded step by step in the course of the country’s modernisation drive. Mr Zhou said since the implementation of the reform and opening up policy, 3,24,712 foreign enterprises have been approved in China with a total contractual volume of overseas investment reaching $ 572.52 billion and an actual utilisation volume of $ 267.45 billion. Mr Zhou said peace was a prerequisite for development and China needs a long-term stable international environment of peace and a friendly peripheral environment with its neighbours so that it can concentrate its energy on economic construction. The President of the
PHDCCI, Mr Ashok Khanna, pointed out that the total
bilateral trade between the two countries, which stood at
Rs 6,8287.47 million in 1997-98, had declined to Rs
61829.06 million in 1998-99. Indian exports to China have
decreased substantially while imports from China had
increased during the year. |
Politics
of oil in full play INTERNATIONAL crude oil prices have more than doubled in just six months. We are having a re-run of the grim story of 1973-74. This time round there is a qualitative difference in response to the emerging situation. The country is going through the election process and major decisions could not be taken to distribute the cost hike on all the products. As a result the major burden has been passed on to the fuel oils used in industry. This is a crushing burden especially when a feel-good factor is elusive. Oil companies have increased the prices of furnace oil by Rs 760 per kilo litre, naptha by Rs 900 a tonne and LSHS by Rs 820 a tonne. These products were removed from the administered price control in 1997. The revised export prices of furnace oil is Rs 7,620; ex-Koyali Rs 7,920; ex-Baruni Rs 8,020 and ex-Mathura Rs 8,150. These figures reflect the severe impact on places like Punjab which are distant from the ports. By adding taxes and freights furnace oil is available at more than Rs 11 a litre. This rise is the sixth in almost as many months. The Union Cabinet had decided in October 1997 to link the price of diesel to import parity levels. This decision was not implemented and the entire burden has been passed on to the industrial fuels. Industry is already passing through a recessionary phase and hefty hike in fuel prices will have very adverse effect. So the politics of oil is again in full play. International prices of crude are steadily rising and are predicted to go upto $ 30 per barrel. Last year these prices were ruling around $ 10 per barrel. The hike in prices is due to cartelisation of Organisation of Petroleum Exporting Organisation (OPEC). They have reduced the productions through a resolution. If this had not happened the price of crude would have come down to $ 5 per barrel. When world has switched over to market related economy such cartelisation has no place. So this oil shock has only be averted through international diplomacy by breaking the cartel. It is unfortunate and unbecoming to raise the prices during the election process when decision diesel and petrol cannot be taken. The Election Commission interferes if some reduction in price is extended. So the Election Commission may direct the Government to take back this hike and leave the matter to the new Government. The prices of crude oil went down very low last year but due advantage was not given to the fuel oils. India’s oil economy has never operated at a realistic level. Subsidies are on the rise. Diesel, kerosene and gas are still being subsidised. Kerosene subsidy has jumped by over 12 per cent in the last few months. This is likely to touch Rs 6,500 crore this fiscal against Rs 5,990 in 1988-89. On the other extreme big fertiliser units are also enjoying a similar advantage. They are again demanding the old regime of differential pricing where oil is supplied at a discounted rate. The Government had given up differential pricing in September 1997. Who knows secret heavy election funding, if any, may do its trick. To meet the oils shock the government has to take radical measures. Custom duty on crude should be reduced. States should reduce the sales tax rates on fuels. Distribution of subsidised items like kerosene should be revamped to see that only the poor get the advantage. As on now kerosene is being misused as mixture with other oils. Fuels used in industry
should be given the moderate blow. The current prices are
certainly not bearable. This price regime may result in
sickness of industry especially in the SSI sector and
price to the nation may be severer. |
Imported
wool hits rabbit farming MORE than 12 rabbit rearing farms in Ambala district are almost on the verge of closure because of the lack of demand for the kits as well as the wool. The business, which had witnessed a boom till the year 1998, has suffered this year due to the withdrawal of duty by the Government on the import of wool as a result of which ‘Angoora’ wool has lost market in the country as imported wool which is superior and cheaper. According to Safeer Alam, a scientist of Krishi Vigyan Kendra at Tepla, near Ambala, earlier the farmers in rabbit farming were able to sell kits and the wool in Himachal Pradesh at the rate of Rs 900 to 1400 per kg which has now declined to Rs 400 to Rs 500 and even there is no buyer at this rate. “More than 150 kg wool is lying in stock with the Sheep and Wool Research Institute, at Garsa, HP, due to the lack of demand. Selling wool at Rs 400 to Rs 500 is a heavy loss to the farmers in this business when the feed for the rabbits is available at the rate of Rs 7 to Rs 8 per kg. According to a farmer,
having 100 rabbits at his farm at Mohra village near
Ambala, the production cost in the business is constantly
on the rise and it is not economical to continue the
business facing a slump and devied co-operation by the
State Government. “We were dependent on sale to
Himachal Pradesh”, said the farmer and demanded that
the Government should immediate put a ban on the import
of wool. The State Government should assist farmers in
getting feed on subsidised rates apart from subsidy on
this business which has almost become sick. |
SBP to
loan 7 crore to Himachal farmers CHANDIGARH, Sept 25 — State Bank of Patiala, Chail branch today organised a farmers meet at village Mahog in Solan district of Himachal. Mr J. S. Mann, Assistant General Manager of the bank said that the bank plans to disburse Rs 7 crore loan to agriculturists in Himachal during the current financial year. Mr Mann disbursed Rs 3 lakh to farmers at the meeting for growing off-season vegetables and flowering crops. he also apprised the farmers, the utility of the Patiala Bank Kisan card and the several other schemes of the bank, like dairy farming, poultry farming, floriculture, rearing of Angora rabbits and cultivation of mushrooms etc. PATIALA: State Bank of Patiala today launched countrywide personal loan schemes. While launching the schemes, Mr R.S. Nanda, General Manager of the bank said the facility of housing finance, car finance, financing of consumer durables and Gyan Jyoti Educational loans, can now be availed of from any nearest branch of the bank. Mr Nanda said that the
bank’s finance to housing his increased by Rs 18
crore during the year 1998-99 and stood at Rs 81 crore
besides investment in Hudco/NHB bonds amounting to Rs 38
crore. He said during the year 1999-2000, the bank has
planned a growth of Rs 2100 crore in deposits and Rs
1,100 crore in advances. |
Allahabad Bank opens ‘quick
collection centre’ CHANDIGARH, Sept 25 — Mr G.R. Bhatia, General Manager, Allahabad Bank (northern zone) today opened its first ‘quick collection centre’ at Ludhiana in the Chandigarh Region comprising Punjab, Haryana, Himachal Pradesh, Jammu and Kashmir and U.T. Chandigarh. Mr Bhatia said that bank has a plan to open six such centre in different parts of the country to cater to the needs of its corporate clients, foreign, private banks and other customers. Mr J.S. Kakkar, Assistant General Manager, Regional Office, Chandigarh said that the centre is fully computerised and is equipped with all modern gadgets to meet the changing scenario of banking. The centre will render prompt customer service in the matter of collection of up country cheques. Mr Bhatia also
inaugurated a hi-tech branch of the bank at Chaura Bazar
in Ludhiana.
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Q: Whether director of a company can be treated as employer under the ESI Act, especially when a manager has been named? Ans: In Gupta C.K. v ESI Corporation (1999-II-UJ.457) Bombay HC held thus: The first petitioner being a director of the company has challenged his prosecution under the ESI Act contending that he was not liable as ‘principal employer’ particularly when a manager within the meaning of S 2 (n) of the Factories Act had been appointed. The HC said that it had examined the complaint. There is no allegation in the complaint that the first petitioner was responsible for violation of the Act except the presumption drawn that reasonable inference can be drawn that he can also be liable being the Director of the company. There is no allegation in the complaint that the first petitioner has committed any offence. It has been held by the SC in AIR 1991 SC 1741 based on the definition U/s 2 (17) of the Act that in the absence of anything more. Director cannot be treated as owner of the factory in order to attract the penal provisions under the ESI Act. In short, if the manager is appointed for carrying out provisions of the Act, no director can be implicated for the violation of the provisions of the Act. SC further observed that admittedly the company had a factory and it is not in dispute that the occupier of the factory had been duly named. It is also not in dispute that it had a manager too. In view of the clear terms in the definition, it is of the view that director did not come within C1. (i) but the occupier being there, clause (i) applied and in that view of the matter, Cl. (iii) could have no application. Therefore, the HC in the present case held that where a manager is appointed for carrying out provisions of the Act, a director of the company will be excluded. Thus, there is no justification for the prosecution of the first petitioner for the violation of the provisions of ESI Act. In the result, the writ
petition was allowed. |
Q: I am getting family pension of Rs 4,000 p.m. (approx) from Telegraph Office, Amritsar. Besides this I have income of Rs 2400 p.m. as interest from Post Office under monthly income schedule (MIS). I also have income of Rs 10,000 p.a. towards interest on FDRs with bank. I own a telephone in my name which was earlier in the name of my deceased husband and telephone was transferred to my name on 31.03.1999. During the year 1998 I received Rs 96,000 (approx) as arrear of commuted pension due to upward revision of pay scales of my deceased husband. I purchased NSC for Rs 5000 during the year. Please tell me whether I should: 1. File income tax return for 1998-99 and in future also 2. Apply for PAN 3. I will get standard deduction of Rs 25000 in case my family pension exceeds Rs 50000 during the year. 4. Where should I invest to have safety as well as income tax exemption. 5. Interest income from Post Office under MIS is taxable 6. Arrear of commuted pension is taxable in my hand. — Rani Sethi, Amritsar Ans: On the facts mentioned by you, you must file your income-tax return. You should also apply for a Permanent Account Number by making an application in Form No 49A. You will get standard deduction of maximum 1/3rd of the salary including pension income subject to a ceiling of Rs 25,000 where the salary/pension income does not exceed Rs 1 lakh. If this amount exceeds Rs 1 lakh the standard deduction will get reduced to Rs 20,000 only. The safest investment for tax rebate U/s 88 is investment in Public Provident Fund as also investment in NSC. The interest income received from Post Office under monthly income plan is not fully exempt from Income-tax. It is, however, subject to tax deduction U/s 80L within the limit of Rs 12,000. Commuted pension is not liable to Income-tax. Q: a) I am a retired employee. During 98/99 I earned about Rs 77000 through my pension, which I am getting through Punjab National Bank. b) I have purchased NSCs of Rs 25000 dated 13.2.96, Rs 30000 Dated 18.11.96 and Rs 10000 dated 25.3.98. c) My earning during 97/98 was about Rs 65000 d) I have still not filed any income tax return not I have applied for PAN. e) I have fixed deposit in bank of Rs 5 lakh but I am not getting interest on it regularly as I am extending the FDs. Please answer the following. If I start filing IT return now, will there be any penalty on me? According to bank officials, after deduction I need not pay any income tax, and if there is, bank will deduct the same and send it to IT office. What is my responsibility? What to do regarding FDs for which bank is responsible to deduct income tax from the interest if it exceeds the limits? How the saving of NSCs is calculated. Can I fill the IT return without the help of CA. If there is any mistake in filling the form, is there any penalty. Is there any book/monthly/weekly which should be read to know about above formalities etc. — P.K. Sharma, Ambala Cantt Ans:
You should immediately start filing your income-tax
return. The bank will be deducting Income-tax on your
interest income from the bank fixed deposit. However, the
calculation of income tax will have to be done by
calculating your gross total income which would promise
of net taxable salary/pension income together with
interest income from bank fixed deposit. Thus, after you
have arrived at the gross total income on this amount
whatever Income tax is payable that will be the gross
income tax payable by you. From this amount of gross tax
payable deduct the tax already deducted at source by your
bank and now the balance resultant figure is the net
Income-tax payable by you. The savings on account of NSC
is calculated for tax purposes by granting rebate on the
investment made you in NSC. This rebate is permissible as
per Section 88 of the Income-tax Act, 1961. The rebate is
available @ 20 per cent of the investment made by you
either in NSC or LIC or the PPF or PF, etc. Now-a-days
filing of the Income-tax return is really very simple.
You can yourself file your Income tax return even without
the help of a Chartered Accountant. In case of some doubt
you can definitely contact the Public Relations Officer
of your area who will guide you and help you in filling
up the requisite columns. The savings or investments made
in NSC have to be reflected in the column meant for
claiming tax rebate U/s 88. The book recommended to you
is Income Tax Guide published by Vision Book Pvt Ltd 24,
Feroze Gandhi Road, Lajpat Nagar-III, New Delhi-110024. |
A RECENT judgement of the Supreme Court has upheld the right of a consumer to question the quantum of insurance settlement made by an insurance company and seek appropriate relief before the consumer courts even after accepting the insurance amount as “full and final settlement” and signing the “discharge voucher” to that effect. However, in all such cases, the consumer has to satisfy the court that the discharge voucher was obtained by the insurer by “fraud or misrepresentation, undue influence or the like or coercive bargaining compelled by circumstances”, the apex court has said. When an insurance company settles a claim, it secures the claimant’s signature on a statement saying that the amount is being accepted as full and final settlement of the claim and that he or she has no further claim under the contract of insurance. In normal circumstances, the consumer’s signature on the discharge voucher extinguishes the consumer’s right to make any further claims on the insurer under the contract, unless of course the claimant makes it clear in writing that he or she is signing the discharge voucher under protest or without prejudice to his/her right to represent the case. However, in certain situations, particularly where the claimant has undergone lot of hardship and suffering because of inordinate delay in the settlement of the claim, the claimant may be forced to sign the discharge voucher without registering any protest, as otherwise the insurer will not pay. There may also be other circumstances where a claimant signs the discharge voucher because of certain misrepresentation by the insurer or coercive bargaining compelled by circumstances. The Supreme Court judgement makes it possible for consumers in such cases to seek relief before consumer courts. However, they have to convince the courts of the circumstances under which they were forced into signing the discharge voucher. While deciding two civil appeals filed by United India Insurance Company (723 and 534 of 1994, decided on August 12, 1999) the apex court clarified that mere receipt of the claim amount without any protest would not always debar the claimant from filing the complaint. The mere execution of the discharge voucher and acceptance of the insurance claim would not stop the insured from making further claim from the insurer, if the signature is obtained in certain suspicious circumstances: by fraud, misrepresentation, undue influence or the like or coercive bargaining compelled by circumstances. And in such circumstances the consumer courts constituted under the Act shall also have the power to fasten liability against the insurance companies, not withstanding the issuance of the discharge voucher. Said the Apex Court: “We are of the opinion that in appropriate cases the forums and the commissions under the Act are authorised to grant reasonable interest under the facts and circumstances of each case. The mere execution of the discharge voucher would not always deprive the consumer from preferring claim with respect to the deficiency in service or consequential benefits arising out of the amount paid in default of the service rendered. Despite execution of the discharge voucher, the consumer may be in a position to satisfy the tribunal or the commission under the Act that such discharge voucher or receipt has been obtained from him under the circumstances which can be termed as fraudulent or exercise of undue influence or by misrepresentation or the like”. Here, following the settlement of their claim against damage caused by fire, Ajmer Singh Cotton and General Mills and Asa Singh Cotton factory had filed complaints before the consumer court, seeking compensation for the delay in settling the claim. While the State Commission dismissed the complaint, the National Commission held that the full and final discharge receipt issued by the companies were in respect of the policies only. And that the liability for damage or loss suffered by a consumer due to negligence of an insurer was a liability arising not under the contract of insurance but under the Consumer Protection Act. Therefore, even after signing the discharge note, consumers could claim compensation under the CP Act. It therefore awarded 18 per cent interest on the amount paid by the insurance company, calculated after the expiry of two months from the date of submission of the surveyor’s report. In both the cases, the surveyor’s report was submitted within a month of the accident and the amount settled by the insurance company eleven months after that. The Supreme Court,
however, disagreed with the National Commission and said
the claimants had not alleged execution of the discharge
voucher under undue influence or misrepresentation and
the like and signed the voucher voluntarily. Nor had they
complained of delay in settlement at the time of
acceptance of the insurance amount. The Commission
therefore was not justified in granting interest.
Besides, the claim for deficiency in service has to be
based on the insurance policy and it cannot be over and
above the liabilities payable under the contract of
insurance, the apex court said.
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Pentafour THE grapevine has it that the shares of this Pentafour group company is being accumulated by a BSE bull operator who expects its price to treble from the current price level of Rs 8 within three months. Any takers? Mysore Cement Again, there is a strong rumour doing the rounds that an international cement major is proposing to take a controlling stake in Mysore Cement. Given the upswing in cement offtake, there are bound to be several such rumours. But, how credible is this rumour? HDFC vs ICICI With ICICI entering the home loans segment, HDFC finally has a contender in its segment which can match its financial clout. But the bottomline here is that the margins of both these giants will inevitably become the casualty. However, the consumers are not complaining. Kale Consultancy The grapevine has it
that the price of this software issue was hiked as an
afterthought from Rs 90 to Rs 110 given the prevalent
market conditions and the tremendous response the recent
public issue of Polaris Software received. But what about
the difference in fundamentals? Food for thought! |
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