Bullion to hit banks by Rs. 70 crore
Ahmedabad: After the share market crisis, it is now the bullion crisis that is going to hit the Indian banking sector. According to the apex bank, Reserve Bank of India, nationalised banks are understood to have suffered losses to the tune of Rs. 70 crore.

Of this, SBI has suffered a loss of Rs 41 crore; StanChart Bank, to the tune of Rs 16.60 crore; Bank of India, about Rs 5 crore; and Punjab National Bank, of about Rs 7 crore. Almost all these banks, except PNB, have issued gold physically against bankers’ cheque from the failed Classic Co-operative Bank.

The problem arose from the account of the co-operative bank’s leading gold dealers. The dealer had been taking gold from nationalised banks on the basis of pay orders issued by Classic Bank. For a period in the first week of March, the bank had got carried away by its zest to retain the dealer as a client and issued pay orders without the dealer having any funds in his accounts. As a result of this, Classic also faced a funds problem and the bankers’ cheques could not be honoured.

The nationalised banks erred in physically delivering the gold without waiting for the proceeds of the bankers’ cheque to be realised.
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RBI concern forces ICICI to merge three subsidiaries
Mumbai: Prompted by the Reserve Bank of India’s direction to bring down the total number of subsidiaries due to supervisory reasons, leading financial institution, ICICI, has decided to merge three of its subsidiaries.

ICICI had 27 subsidiaries after the bank ceased to be a subsidiary this week. If the proposed merger comes through, the number will fall further to 25. The fact that the institution has a large number of subsidiaries is said to be one of the reasons the apex bank has refused to clear its proposal for a non-life insurance company.

These are ICICI Capital Services, ICICI Web Trade and ICICI Personal Finance and these will be merged into a single company.

While the board of directors of the institution has cleared the merger proposal, the Securities and Exchanges Board of India (Sebi) has to approve the same. The Sebi clearance is crucial since broking firms are prevented from carrying out fund-based activities.
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New swap ration for UTI Bank-GTB merger put at 2:1
Mumbai: While both the parties to the merger refuse to comment, it is understood that the accounting firm, Deloitte, Haskins & Sells, appointed to relook the swap ratio in the merger between UTI Bank and Global Trust Bank has recommended a lower ratio than originally suggested.

The new report is understood to recommend a ratio of 2:1 as compared to the 2.25:1 proposed earlier for the merger.

While the new report has been submitted to the Reserve Bank of India, the apex bank is reportedly waiting for the Sebi report on alleged price manipulation in the GTB scrip.

According to a senior UTI official, the apex bank has conveyed to the financial institution that an approval for the merger would not be possible before six to eight months.

Both banks had decided in January to merge and form UTI Global Bank. Deloitte had approached GTB to provide additional information relating to the share price movement and volumes in the bank’s scrip in the months ahead of the merger.
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Andersen-Ficci report on media downgrades growth
Mumbai: Last year Arthur Andersen had prepared a report on the media and entertainment industries for the Federation of Indian Chambers of Commerce and Industry (Ficci). The report had predicted a huge spurt in the growth of the industry.

Exactly a year later, in a possible reaction to the global slowdown in media and New Economy businesses the world over, the Ficci-Arthur Andersen report on the India entertainment industry has slashed its estimations of growth from last year's projections.

Many considered last year’s report as over -optimistic, with Ficci-Arthur Andersen estimating a five-fold boom in the entertainment industry from Rs 6,215 crore in 1999 to Rs 33,984 crore in 2005.

Now the new report more realistically places the growth prospects at a more conservative three-fold. The current size of the industry is rightly put at Rs 9,600 crore, but the growth estimations for FY 2005 have been cut to Rs 28,600 crore.

Significantly, the current Ficci-Arthur Andersen report also scales down growth proscpects for the film industry to more realistic levels. The size of the industry is estimated at at around Rs 1,300 crore. If the current plans for the expansion of exhibition infrastructure like multiplexes and the availability of institutional finance goes through, the film industry is estimated to grow at 25 per cent per annum to a size of about Rs 4,000 crore by FY 2005.

The latest report lays great stress on speedier corporatisation of the film-producing companies and players. It also pleads for fast-paced development of entertainment infrastructure and for the removal of roadblocks such as the high entertainment tax which has made access to cinema restricted.
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