Conciliation marks GoT-IT meet
New Delhi: The much awaited meeting of the Group on Telecom and IT (GoT-IT) which was expected to develop into a head-to-head clash between the basic service and cellular service providers, turned out to be the starting point for a reconciliation. With a number of players in both the service groups being common, the GoT-IT advised them to sort out their differences between their two operating units and the group agreed to meet today with a compromise formula. Common to both service providers were the Tatas, Bharti, Shyam Telecom and Reliance.

The meeting however seemed to display a split in the Association of Basic Telecom Operators, with members like Bharti, Tatas and Hughes writing to the Group that their views were not properly represented by the official ABTO presentation. Their representation was clearly aimed at the second group within the ABTO which includes Reliance, HFCL and Shyam Telecom.

Earlier in the presentation made by the cellular operators, they stated that WLL mobility was neither a new technology nor did it have features that made it inherently cheaper. It added that CDMA-based WLL was a full-blown cellular service that was being offered to fixed service providers at "hugely preferential economic terms."

According to this delegation, the apparently low tariffs being offered by CDMA services were only possible by cross subsidies, which basic service operators could offer.They further stated that the procedure followed by DoT and Trai in implementing WLL limited mobility were "seriously flawed and lacked transparency" and that moving mobile services to a permanently cross subsidised regime (as limited mobility is supposed to be) would be disastrous for company finances as well as for the exchequer.

Most surprisingly, however, the contentious issue of spectrum charges supposedly paid by cellular operators did not figure in the presentation.

N K Singh, officer on special duty at the PMO, believed to be one of the key figures promoting WLL limited mobility, was conspicuous by his absence.
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UTI to be corporatised, delinked from RBI
New Delhi: Close on heels of its decision to delink itself from the National Housing Bank, Nabard and the State Bank of India, the government is said to be seriously considering the delinking of Unit Trust of India from Reserve Bank of India.

In UTI’s case the delinking would come with amendments to the UTI Act, which will ensure the financial services behemoth will be corporatised. This would also mean that the country’s largest mutual fund would also not get any budgetary support making it impossible for bail-out packages of the kind seen in 1999 to shore up UTI’s US-64 scheme.

The corporatisation will ensure the conversion of the trust into a company and the delinking will take care of the arm's length principle between the regulator and a market player.
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New accounting standards make it difficult to mask losses
Mumbai: The age-old practice followed by many Indian companies of window-dressing their account by hiving off their loss making businesses into separate subsidiaries is likely to come to an end.

The Institute of Chartered Accountants of India has recently issued the Accounting Standard-21 (AS-21) on consolidated financial statements. The impact of this can be far-reaching, especially on companies which have loss-making subsidiaries.

The AS-21 on consolidated financial statements makes it mandatory for all parent companies to present a consolidated balance-sheet and profit and loss account in addition to separate subsidiary financial statements.

It makes it necessary for parent companies to provide financial information about their economic activities and that of their subsidiaries as a single entity only if the parent has control over more than 50 per cent of voting power in the subsidiary
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PwC suggests merger of two key RBI departments
Mumbai: Global consulting firm, PriceWaterhouseCoopers, has recommended to the Reserve Bank of India, that its two crucial units, the department of supervision (DoS) and the department of banking operations and development (DBOD), be merged into one entity.

This recommendation comes in the wake of the consulting firm’s assignment on a project on risk-based supervision for the RBI.

At present, these two departments function as independent entities reporting to the Board for Financial Supervision (BFS). Under the proposed structure, these two will be merged into one entity reporting to BFS.

This move, if implemented, will bring about a focal point of supervision and regulation for the banks through greater cooperation and coordination among the officials to monitor the banks both from the angle of regulation and supervision at the same time.

This project on risk-based supervision is being funded by the Department of International Development, DFID, United Kingdom as a part of the organisational grant awarded to individual countries to provide support to banking supervisory and regulatory authorities.

The report has also advised RBI to allot each official in the merged entity a maximum of two to three banks for supervision. At present, in the specific department, banks are categorised as public sector, private and foreign etc and are supervised by few officials in separate cells in the same department. Under the proposed framework, bank specific supervision can be initiated so that banks will be supervised on a continuous basis specifically and not in a generalised manner.

This will enable a more detailed inspection and prudent bank-wise supervision with more time allotted to each bank on finer details.
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