The findings of the interim report of a forensic audit by Grant Thornton, an audit, tax and advisory firm, engaged by the board of the disgraced Infrastructure Leasing and Financial Services Ltd (IL&FS) -- detailing the gifts and favours that the senior professionals of credit rating agencies (CRAs) have allegedly enjoyed to keep a rotting company on a high pedestal -- exposed the soft underbelly of India’s rating industry. Till the findings of the report trickled down in the media, the CRAs were criticised for basking in the cool comfort of their offices, oblivious of the ground realities; they miserably failed in their due diligence and acted only when the writing on the wall was visible to the entire world. The alleged corrupt practices indulged in by the rating officials add a dirty dimension to this.
Last Thursday, shares of Yes Bank Ltd slumped close to 15 per cent to hit a new 52-week low as many brokerages rushed to say “no” to the bank’s stock after the lender's June quarter earnings missed analysts’ estimates and the pile of bad loans continued to rise. The stock’s woe started in June after Swiss brokerage UBS maintained 'sell' rating on it and cut the target price to Rs 90 from Rs 170, citing weak earnings going ahead. On Thursday, the stock touched an intraday low of Rs79.
This Friday marks the 50th anniversary of bank nationalisation. Fourteen banks with deposits of at least Rs50 crore each were nationalised in the midnight of July 19, 1969 hours after Prime Minister Indira Gandhi addressed the nation on this. The Ordinance that paved the path for nationalisation was challenged, an interim stay was granted on a few issues but a 34-day trial before a 11-judge bench in Supreme Court later, all roadblocks were cleared.
Writing on Union Budget two days after it was presented is a predicament akin to that of Larry Fortensky, the US construction worker -- seventh and last husband of Elizabeth Taylor (by her eighth marriage). On their honeymoon in 1991 at Michael Jackson's Neverland Ranch, Fortensky knew well what exactly he was expected to do but his challenge was how to be different from Taylor’s previous husbands. On a serious note, let’s focus on the good, the not-so-good and the tricky parts of Modi 2.
In the run up to the Union Budget, all industry bodies reach out to the North Block on Raisina Hill that houses the finance ministry with their agendas. This annual ritual, for the banking industry, typically focusses on the unlevel playing field vis-à-vis mutual funds and the government savings schemes. The banks find it difficult to bring down the interest rates on deposits for fear of losing out to the mutual fund schemes that offer certain tax benefits and the high-yield government savings schemes.