Source :TNN: Dhananjay Mahapatra :Nov 4,2011
NEW DELHI: The government is proposing radical reforms to ensure decriminalization of politics and intends to table a bill in the winter session of Parliament proposing to debar candidates facing trial in serious and heinous offences.
At present, under the Representation of People Act, only persons convicted by a trial court and sentenced to more than two years imprisonment are debarred from elect ions for a period of six years, which commences from the date of completion of the prison term.
This allows persons facing multiple murder charges to contest elections. Moreover, even if a sitting MP or an MLA is convicted of an offence and sentenced to more than two years jail midway through his term, he continues to be a people's representative and can attend Parliament or assembly if he files an appeal in the higher court and gets a stay on the conviction.
The proposed legislation, first reported by TOI on June 17, is going to be strict on such exigencies and says those who are chargesheeted by police, CBI or other investigating agencies for murder, acts of terrorism, rape, dacoity and similar serious and heinous offences would be debarred from contesting elections till the tri al court acquits them.
The legislation is part of the larger bouquet of anti-corruption measures government has embarked upon to blunt the attacks it has faced from Team Anna as well as political opponents over the issue of corruption. Government plans to pass three legislations: Lokpal Bill, Judicial Standards and Accountability Bill and Whistleblowers Protection Bill in the winter session. Besides, it has also planned to introduce Grievance Redressal Bill which, while ensuring smooth delivery of services, will also tackle corruption in providing the same.
Conceived as an alternative to Team Anna's insistence that the proposed Lokpal should be tasked with tackling corruption among lower bureaucracy as well, the Grievance Redressal Bill is being projected as a better way of fighting "cutting edge graft". Government sources point out that under the Lokpal bill, failure to deliver a service is proposed to be treated as an act of corruption. They say this could only delay the delivery of government services since establishing a criminal charge could take time.
As against this, the Grievances Redressal Bill provides to separate corruption from failure to deliver a public service/good and, thus ensuring that the grievance for the failure of delivery of service is redressed within a fortnight.
During the discussion on stricter measures to decriminalize politics last week in the Cabinet Committee on Political Affairs, law minister Salman Khurshid argued strongly for the bill. These proposals on electoral reforms were firmed up during the tenure of Khurshid's predecessor M Veerappa Moily, who had constituted a Committee on Electoral Reforms to recommend to the government concrete ways in which the electoral system could be strengthened through legislative means. Khurshid also laid stress on amending the existing provisions of RP Act to make filing of false affidavits by candidates along with nomination papers to declare their assets and criminal antecedents a serious offence which could attract a permanent ban on contesting elections.
By this way, disclosure of criminal background would be made non-negotiable.
It means, if a candidate deliberately conceals his criminal antecedents and is found guilty, then he will be forced to abandon a career in electoral politics. The proposed amendments, discussed in the CCPA, also include withdrawing immunity to sitting MPs and MLAs from continuing with their tenure after being held guilty and sentenced to more than two years imprisonment even if they get the conviction stayed by a higher court on appeal.
By this, the government intends to force an elected representative to resign from his membership from Parliament or assembly the moment a trial court finds him guilty of an offence and sentences him to more than two years imprisonment.
dhananjay.mahapatra@timesgroup.com
Stephen Chernin/Getty Images
Rajat Gupta spoke during a Global Business Coalition forum on HIV/AIDS,
Tuberculosis and Malaria, at the United Nations headquarters in New York, 13 June 2007.
Source :Ajit Mohan :WSJ :Nov 4,2011
Last week in New York, Rajat Gupta, the man who led McKinsey for almost a decade and was a board member at Goldman Sachs and Procter & Gamble, was accused by U.S. prosecutors of leaking insider information.
The six-count indictment alleges that Mr. Gupta used his position on the boards of premier institutions in the U.S. to “become the illegal eyes and ears for his friend and business associate, Raj Rajaratnam,” founder of the Galleon Group hedge fund, who himself was found guilty of insider trading last month and faces a prison sentence of 11 years.
Even as Mr. Gupta was being released on $10 million bail by a New York court (he had pleaded not guilty to all charges), the Occupy Wall Street protests were spreading to more cities. These protests have dramatically framed the anger and angst of America’s displaced middle class, who have become convinced that the “game” is rigged from the start, and that too much power and money rests with Wall Street, a conviction reinforced by the indictment.
In Mr. Gupta’s case, it was a stunning reversal for a man whose rise in the global corporate world foretold India’s own rising fortunes in the last three decades. Mr. Gupta at some point appears to have crossed his own Rubicon, prompting him to allegedly share information that was confidential with a friend.
Last year’s leaked “NiiraRadia” tapes revealed an India where leading business figures and television anchors — aided by lobbyists and public-relations professionals — were too cozy by half with political leaders. Similarly, the conversations between Mr. Rajaratnam and Mr. Gupta at the very least reveal an intimate relationship built on passing privileged information, and, in Mr. Gupta’s case, portray a diminished individual in gross violation of the values supposedly at the core of the firm he once led.
Mr. Gupta’s actions had consequences, unlike the case of many of the players in the Radia tapes – some of whom continue to give us daily lectures on morality and ethics, on television and in print.
In the U.S., a disturbing popular commentary tried to paint the allegations against Mr. Gupta and the conviction of Mr. Rajaratnam as being symptomatic of the values of the South Asian community at large. Writing in Newsweek, Suketu Mehta, the author of “Maximum City,” attempted a multi-layered sociological explanation, claiming that “the whole story speaks to the South Asian-American community: its pursuit of success and money at any cost; the differences between immigrants and the first generation.”
It seems ridiculous to attribute a pattern of behavior to a particular community at a time when the most egregious stories on Wall Street over the last three years have been about misbehavior, misdemeanor and misappropriation at firms large and small, the collective sum of which triggered the worst economic crisis since the Great Depression. If anything, the central characters in the story have spent much of their adult lives in the U.S. and are products of America’s institutions, from McKinsey and Chase Manhattan to Harvard and Wharton.
If there is a narrative thread in their stories, it is one with fewer roots in India than in the insider-trading scandals of junk bond titans Michael Milken and Ivan Boesky in the 1980s.
The reaction of India Inc. to Mr. Gupta’s indictment has been mixed. On one hand, many business leaders are aghast at the allegations and Mr. Gupta’s fall, most genuinely sad and disappointed to see someone held in deep respect in this position. Others seem surprised that behavior that is part and parcel of doing business in India could actually be considered illegal in another part of the world, with a prison sentence to boot!
Of course, in a deeply ironic twist, some of the most outspoken criticism of Mr. Gupta (and the accompanying name-calling) has come from the same lobbyist-fixer-media pundits whose own booming voices were all over the Radia tapes.
However, nothing has been more amusing than the chutzpah of the many individuals and institutions in India that have claimed a distance from Mr. Gupta that did not exist in reality. Many were quite comfortable using Mr. Gupta’s access and relationships when they were useful and now are busy attempting to scrub clean a history of deep and close association. (Full disclosure: I can only add, on a personal note, that in the limited interactions I had with him, he was a thoughtful and constructive supporter of a non-profit initiative I was leading).
We know that it is human nature to want to build up heroes and then to tear them apart without mercy. Even so, as we recognize the serious nature of the allegations against Mr. Gupta, we must acknowledge, too, that he has been behind the creation of at least one world class institution, the Indian School of Business (perhaps the only educational institution of excellence in independent India crafted with the energy of the country’s private sector), and another, the Public Health Foundation of India, that could yet play a meaningful role in public health reforms in the country. As much as the legacy of Mr. Gupta may become one of greed, a part of it will always be about a stellar contribution to his country of birth.
The allegations are really about Wall Street and America. But the underlying issues exposed by the revelations — and the broader framing of those issues by the Occupy Wall Street protests — are relevant to India, too.
At the centre of the debate is the question of transparency in the rules of the game and the way in which valuable information is accessed and leveraged. Here, India is closer to oligarchic Russia than it is to the comparatively rules-based West. With the government still playing a central role in directing industrial policy and framing economic opportunities, there is enormous value in gaining access to inside information and knowledge on the complex web of policies, regulations and executive orders.
The practice that is an offense on Wall Street is, in many ways, the benchmark by which astuteness is judged in the private sector in India: the ability to glean and leverage information not easily available in the public domain to create value for the enterprise. And this has given rise to a new entrepreneurial breed in the country: the one that mixes executive roles, political power and private enterprise.
Examples are legion of associates of leading industrial houses becoming state and government ministers, and then continuing to run their businesses on the side; ministers incubating and growing private enterprises; second generation businessmen running for office on the back of access to the heft and influence of the family enterprises; and, of course, the lobbyists, the fixers (and the occasional television commentators) who help bring all of these savvy entrepreneurs together to add economic value for all involved.
Not that this behavior is limited to the top echelons of power. The business of information is an attractive, nationwide enterprise. From the district collector who passes early information on the conversion of rural land to an affiliated investor to the office clerk who reveals the status of a permit approval in process, India is full of savvy “entrepreneurs” who know how to put the right value on privileged information at the right time.
India’s economic growth over the last two decades has come on the back of exploiting the low-hanging fruit: comparatively easy structural reforms and opportunities presented by the demographic dividend.
The next wave of growth will have to come from unleashing the real entrepreneurial energy of India’s talented millions. Genuine competition between ideas and enterprises, and the assurance of a fair playing field, are absolutely essential for that to happen.
So, even as we pause to reflect on a fallen hero, this is a great moment to reflect on the rules and behavior that have become a part of our private enterprises which, if we don’t learn a lesson from across the ocean, will hold us back from the promise of our future.
–Based in New Delhi, Ajit Mohan has worked with private and public institutions around the world. He is an alumnus of McKinsey and Wharton
Source :Reuters :Nov 5,2011
The Reserve Bank of India (RBI) may consider reversing its tight monetary stance as inflationary woes begin to ebb next month, C Rangarajan, the Prime Minister's chief economic adviser, said on Saturday.
The RBI has raised interest rates 13 times since March 2010 in a bid to control inflation, which has topped 9% for nearly a year.
However, Rangarajan said headline inflation may remain high for next one-two months after which it is expected to slowdown to around 7% by end-March.
"It is expected that by December, January we should see decline in inflation, that may be the time when perhaps reversal of policy (monetary policy) will become possible," he told reporters on the sidelines of a banking conference.
"As the inflation rate shows definite signs of decline, the policy regime also have to change."
A cumulative rate tightening of 375 basis points is seen slowing down India's domestic consumption driven growth story. But the RBI has refused to lower its guard against inflation and remains the only central bank that continues to tighten monetary policy amid global slowdown.
Early this week, the Reserve Bank of Australia (RBA) became the latest central bank to cut rate in response to threats to the global economy from Europe's debt emergency.
India's slowing economic growth has slowed down tax revenues, squeezing central finances and putting a question mark on the government's ability to restrict the fiscal gap for the 2011/12 financial year at the budgeted level of 4.6% of gross domestic product.
Any slippage on the fiscal gap target has the potential of worsening India's inflationary problem and choking private investment.
RBI, which last week signalled a pause in its tightening cycle, has warned of inflationary risks if the government's deficit for the current fiscal year ending in March exceeds the budget target.
Rangarajan, a former RBI chief, said the government should make all possible efforts to keep the fiscal deficit at the budgeted level and consider deregulate petroleum prices once inflation starts slowing down.
The government is under fire for allowing a hike in petrol prices on Friday and is expected to delay a planned diesel price hike for fear the move could cause further damage ahead of key state elections beginning early next year.
He also flagged risks to the asset quality of banks from a slowing economy and rising interest rates.
Source :Alekh Angre :Money life :
According to the revised model for education loan, the repayment period is now extended up to 15 years depending on the loan amount
Indian Banks' Association (IBA) in its revised circular for education loanhas recommended extension for the repayment period depending on the loan amount as well as asked banks to clear a loan application file within a month.
Prabhuta Vyas, senior vice-president, social banking, IBA told Moneylife, "The circular for the revised model on education loan was sent to member banks on 30th August with immediate effect.
Earlier, students had to start repaying one year after completing the course or six months after getting a job, whichever was earlier. The loan repayment tenure was between five to seven years. This has been extended to 10 years for loans up to Rs7.5 lakh and 15 years for loans above Rs7.5 lakh.
IBA had also recommended of creating a credit guarantee fund to tackle the problem of rising defaults in the loan category up to Rs4 lakh. "The recommendation (credit guarantee fund) is still pending with the government."
Prashant Bhonsle, country head of Credila Financial Services, which specialises in education loan says, "From the point of students and parents, the extended repayment is good news. As the EMIs amount decreases, the default risk also gets lower. This would also help to mitigate risk to a certain extend. However, this would be challenging for banks to track student borrowers for 15 years. At Credila, we provided tenure of repayment up to ten years, after understanding the need of the students. We felt that a student should not have any debt obligation during the initial years of his career."
Experts point out that there was no need to extend the repayment period as the student and their parents would have continued to apply for the loan and pay back on time. The higher extension of repayment period may lead to lesser lending by the banks. However, banks have welcomed the revised model of education loan.
An official with leading public sector bank, preferring anonymity, toldMoneylife, "Our bank will redraft the scheme according to the revised model and put it before the board for approval. Up to ten years of repayment period is good considering five years of studies and two years of employment. Even housing loan has such repayment period. There is some risk, but the education loan scheme is becoming popular among the students and there is clear demand. Overall this revised model is pretty workable."
B Vara Prasad, general manager (retail, payments and settlements and third party products), Union Bank of India, says, "There is nothing wrong in the revised model. It would put less pressure on the students to repay his loan. We welcome such move."
The revised scheme proposed by IBA has addressed concerns and operational difficulties faced by the lenders. According to the revised model, merit would be the sole criteria to be eligibility for the approval ofeducation loan, admission under management quota would be kept out of the scheme, loan quantum would be justified by the employment benefit and extension of the repayment period to reduce the burden on the beneficiaries.
According the revised model there will be no penalty on prepayment. There would be no processing charges levied on loans sanctioned. If banks charges, processing fee for student going abroad for studies, it would be refunded upon the student taking up the course.
IBA said, "Bank may provide 1% interest concession if interest is services during the study period and subsequent moratorium period prior to commencement of repayment."
It also said that meritorious students from the same family are eligible for the loan. "Existence of an earlier education loan to the brother(s) and or sister(s) will not affect the eligibility of another meritorious student from the same family obtaining education loan as per this scheme from the bank," the IBA said.
According to the current guidelines, banks lend up to Rs4 lakh without any security. But for loans between Rs4 lakh and Rs7.5 lakh, they can ask for personal guarantees, and for a loan above Rs7.5 lakh collateral is required.
Source : Hindustan Times: Nov 2,2011
Sony reported a 27 billion yen ($346 million) loss for the latest quarter and downgraded its annual earnings forecast on Wednesday to stay in the red for the fourth year straight, battered by the strong yen and poor sales of flat panel TVs.
The Japanese electronics and entertainment conglomerate is now projecting a 90 billion yen loss ($1.2 billion) for the fiscal year through March 2012 after earlier forecasting a profit of 60 billion yen ($769 million).
Sony Corp. said the strong yen and lower sales, especially in TVs, hurt July-September results. It also suffered production disruptions from the recent floods in Thailand, which came on top of the supply problems from the March tsunami disaster in northeastern Japan.
Sony's TV operations have lost money for the past seven years straight amid price plunges, an oversupply of panels and intense competition.
The company has also suffered a blow to its reputation because of a massive online security breach around the world earlier this year, affecting more than 100 million online accounts.
Analysts say the maker of Bravia TVs and Walkman players needs to restore its reputation for innovative gadgets as U.S. rival Apple Inc. powers ahead with its iPod, iPad and iPhone.
Sony had a loss of 260 billion yen in its previous fiscal year.
Source :Moneylife :November 04, 2011 03:18 PM
Sources say that the apex bank, acting on the memorandum sent by the bank officers’ union, has issued a 15-point Monitorable Action Plan after conducting an investigation into the bank, to strengthen its weak financials. RBI has come down strictly on the bank’s capital adequacy ratio and share of top depositors
The Reserve Bank of India (RBI) had conducted an inspection and issued a 15-point Monitorable Action Plan (MAP) to Dhanlaxmi Bank.
This was followed by the furore caused due to a memorandum sent by the All India Bank Officers’ Confederation to the RBI stating the weak financials and certain wrongdoings by the bank. (The stink coming from Dhanlaxmi Bank: AIBOC raises serious allegations).
Moneylife has accessed and reviewed some parts of this action plan. While the bank was in a denial mode about the issue, sources say the RBI has taken the union seriously even if it is just a matter of “abundant caution.”
As per the MAP, Dhanlaxmi Bank should moderate its loan growth, year-on-year, to 25% for 2011-12, should not be dependent on portfolio buyouts and should focus on increasing its direct advances. It has asked the bank to improve its earning ratio and cash-income (efficiency) ratio to 70% by March 2012 from its current 83.73% during 2010-11.
According to sources, the RBI has been especially tough on Dhanlaxmi Bank because it thinks that the bank has grown really rapidly and they want to ensure it’s not on a reckless growth path. RBI has put in place strict conditions for monitoring its operation, but it is willing to give the bank adequate time to ensure that it remains safe and steady without rocking the boat.
Sources from the banking industry told Moneylife that RBI was concerned about a few issues with Dhanlaxmi Bank. It includes the decision by the bank to capitalise salaries and offer bonuses when it was not in a position to pay the same. And because of these actions, the RBI has been extraordinarily strict on its CRiR (Credit Risk Rating). However, the RBI believes that given the time and stringent monitoring, the bank would not face any difficulty.
As a further measure, sources say RBI has put one of its general managers on the board of duty of Dhanlaxmi Bank so that every major action taken by the bank and whether it is adhering to the guidelines of RBI or not can be monitored almost on a continuous basis.
Interestingly, the RBI, in its action plan, has also asked the Dhanlaxmi Bank to improve its capital adequacy ratio to 12% by March 2012. It is stricter for Dhanlaxmi Bank than other banks where the capital adequacy ratio is only 9%. Sources say that this is one area where RBI is extra strict with the bank, but it is in the interest of both the bank and its depositors.
The RBI has also been cautious about top depositors of the bank. RBI, through MAP, has asked the bank to bring down the share of the top 20 depositors in total deposits below 20% by March 2012. Sources say that this is another measure where the apex bank is strict with the bank so that it ensures that there are stable deposits that the bank builds and not institutional deposits which would fly out any time.
RBI has also asked Dhanlaxmi Bank to strengthen its liquidity risk management and reduce dependence on high cost borrowing/deposits by March 2012, put a limit of 20% of total book for portfolio buyouts and submit a monthly report on performance of loan portfolio to its regional office in Thiruvananthapuram, Kerala, strictly adhere to directions issued under Section 35 (A) of the Banking Regulations Act and improve its accounting policies and implement good practices particularly in reference to booking of interest on bills discounted, accounting of intangible assets etc.
In MAP, the apex bank has asked Dhanlaxmi to maintain its SLR (statutory liquidity ratio) cushion of 1% of its NDTL (net demand and time liabilities) till its liquidity profile improves. Considering the weak financial position of the bank, the RBI has asked the bank’s board that it “may put a suitable cap on interest rates carried by the bank.”
Further, by December 2011, the apex bank has asked Dhanlaxmi Bank that it should put in place a comprehensive BCP (business continuity planning) system, improve its KYC/ALM (Know Your Customer/Anti-Money Laundering) norms, put a system driven NPA (non-performing assets) classification in place and ensure that all MIS (management information system) data flows are system-driven.
