Don't bend backwards to please FIIs, says Damani
India need not foreign going the Thailand, Indonesian or Malaysian way,
so long as it takes care not to bend over backwards to accommodate
foreign institutional investors, BSE president MG Damani said on
Thursday. Briefing news persons on his visit to Bangkok, China, Kuala
Lumpur and Hong Kong, Damani said the same was undertaken to study what
had gone wrong in the markets there and to learn from their experience.
Fortunately, he said, even though India has foreign investments worth
$9.1 billion. FIIs have only a 6-7 per cent holding in our market.
"We are vulnerable to the extent that the FII investment is in the index
shares, but the economy will not get affected as a result of this," he
said. The problem faced in Indonesia was that they let the foreign
holdings go up 50 per cent. Therefore, when the FIIs decided to sell,
the collapse was inevitable, he said. Thailand and Malaysia also had
been living beyond their means, borrowing in dollars and using very
little for useful development, he added. Damani clarified that foreign
investors were welcome if they felt comfortable in India, but India
should not go out of its way to accommodate them. They might clamour for
things like derivatives saying that it is necessary for hedging, but
where in the world has it been possible to find out whether derivatives
are being used for hedging or for speculation, he asked.
Govt unwraps autonomy package for banks
The Finance Minister, Mr. P.Chidambaram, today announced an autonomy
package for public sector banks, which would unshackle the banks on a
number of administrative fronts, including recruitment and postings. The
package has laid down four criteria for the banks to enjoy the entire
set of autonomy features which have been outlined. These are a capital
adequacy ratio of eight per cent, an NPA (non-performing assets) level
below nine per cent, net profit of three years and a minimum of Rs. 100
crores in net-owned funds. Mr, Chidambaram told reporters after his day
-long meeting with the chief executives of public sector banks, that the
Board of Directors of those banks which meet the four criteria would
enjoy the entire set of autonomy parameters outlined, while those which
do not would be granted "lesser autonomy". "A set of 11 kinds of
autonomy" had been specified in the package. Among these are freedom to
recruit specialist officers, undertake campus recruitment of
probationary officers, authority to create posts below the level of
General Managers and to formulate their own policies with regard to
rural postings of officers and deputation's and lateral movement of
officers to other banks. According to the Finance Minister, greater
administrative autonomy was felt necessary to cope with the increased
operational freedom granted by the RBI in the wake of liberalisation and
de-regulation. One the issue of the need to improve the credit flow to
the corporate sector, Mr. Chidambaram said "there was an upturn in
credit off-take which is likely to be sustained during the next five
months of the current fiscal. I have told the banks to give greater
attention to priority sector lending with special attention to PMRY and
IRDP".
'Indian stock markets down 3.4% in Oct'
Indian share markets dropped by 3.4 per cent, a decline substantially
lower than several emerging and developed markets, according to the
Morgan Stanley Capital International (MSCI) indices for October. Indian
stock markets performed better than 31 other emerging markets and 30
developed markets in October. Turkey and Morocco were the only two
markets which recorded positive gains in October, Besides these two
emerging markets, only Colombia, which fell by 1 per cent, was better
than India. Stock markets all over the world recorded negative
performance in October. Among the emerging markets, the worst performers
were Thailand, which recorded a fall of 34.1 per cent, Korea (31.1 per
cent), Brazil (24.2 per cent) and Taiwan (15.5 per cent). Overall, the
MSCI Emerging Market (EM) index for Asia recorded a decline of 18.9 per
cent. The MSCIEM index for the Far East declined by 22.5 per cent, and
for Latin America by 19.1 per cent. According to a Morgan Stanley press
release, the extreme volatility in the Asian currency market in October
continued to take its toll on the region's stock markets. The MSCI Hong
Kong index declined by 29.1 per cent.
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