Sinha wants badla to go
New Delhi: Finance Minister Yashwant Sinha has indicated that the government is in favour of banning badla when rolling settlement is introduced from July 2, although officially the decision has been left to the Sebi board.
All measures announced by Sebi are likely to go through, including ban on short sales, despite market sentiment against it.

The belief in the ministry is that badla is the root cause of all manipulation in the market.

There is some opposition to the introduction of rolling settlement within Sebi as well, on technical grounds. Rolling settlement perceives a T+5 scenario where transactions have be squared up within 5 days after trade through payment through the banking system. The final aim is to achieve a T+3 settlement. The practice has not been popular with the 160 'B' group shares where it has already been introduced. Now the finance ministry wants it extended to the 200 'A' group shares as well.

They also fear of a market crash in the face of a liquidity crunch if bankers are not able to clear payments within the prescribed time period.
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Bourses hit by low market turnover
Mumbai: The fall in turnover in the stock markets, thanks to recent developments, has brought down the earnings of stock exchanges. The main source of earnings for stock exchanges is the transaction charges they levy on market operators. Hence a declining turnover in the capital market will directly affect this income.

Thus, the BSE has earned income from transaction charges, amounting to Rs 1.17 crore in April, much lower than the Rs 5.46 crore recorded in March. As against this, it had earned total transaction charges of Rs 3.02 crore in April 2000.

Transaction charges are recovered from broker members on the basis of business volumes. The BSE charges Rs 2.50 and the NSE charges Rs 6 for business volumes of Rs 1 lakh per member.

Turnovers have slumped at both the exchanges from a daily average of Rs 11,300 crore in February to Rs 4,800 crore in March and Rs 3,000 crore in April 2001.
The fall in turnover has been attributed to Sebi's crackdown on leading brokers and the ban on short sales, which brought down speculative business to a standstill. There are fears that it may further go down when rolling settlement gets introduced from July 2.
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Brightstar still firmly in race for VST Kolkata/Hyderabad/New Delhi: The Damani controlled Brightstar Investments, which has made an open offer for VST, and whose offer proposal is still awaiting clearance from Sebi, made it clear that it is still firmly in the race, and that Sebi had almost cleared the proposal.

It informed the Hyderabad stock exchange of its open market purchases, which had taken its acquisitions to 0.52 per cent of the equity capital of VST from the open market, bringing up its holding in VST to 14.97 per cent.

"Brightstar is certainly buying VST shares and it wants to underline the fact that the open offer is going ahead and that it is committed to it," said John Band, CEO of ASK Raymond James, lead managers to the company offer. He said Sebi officials had cleared the open offer application and it was only awaiting the signature of DR Mehta, who was out of town.

Brightstar had proposed to acquire 30.88 lakh shares of VST at a price of Rs 112 per share but had been held up because of investigations being made into the role of the Damani brothers in the recent stock market crisis.

Russell Credit Ltd, an investment subsidiary of ITC, had come up with a counter offer at the rate of Rs 115 per share. Russell Credit has also been buying up the stock in the open market.

Meanwhile, there are reports that Brightstar Investments is likely to hike the offer price "marginally" from its open offer price of Rs 112.
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Nedungadi doors closed for Banthia
Kozhikode: The Reserve Bank of India (RBI) has debarred Mr Rajendra Kumar Banthia, former vice-president of the Bombay Stock Exchange (BSE), as director of Nedungadi Bank Ltd (NBL).

The directive comes in the wake of its findings that the Mumbai-based brokerage outfits — Custodian Funds India Ltd, Harvest Deal Securities and Srikant G Mantri — which had been misusing NBL funds for indulging in arbitrage business are controlled by Mr Banthia. Mr Banthia is said to own 8 per of the shares of the bank, and access 39 to 40 percent through proxies.

This is seen as a major step by the RBI to clean up the banking system by sending out clear signals to sharebrokers that it will not be possible to hijack banks to misuse their funds.
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