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Today's Highlights

Friday, 07th November 1997.

Dont bend backwards to please FIIs, says Damani
Govt unwraps autonomy package for banks
Indian stock markets down 3.4% in Oct

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Don't bend backwards to please FIIs, says Damani

India  need not foreign going the Thailand, Indonesian or Malaysian way,
so  long  as  it  takes  care  not to bend over backwards to accommodate
foreign  institutional  investors,  BSE  president  MG  Damani  said  on
Thursday.  Briefing  news  persons on his visit to Bangkok, China, Kuala
Lumpur  and Hong Kong, Damani said the same was undertaken to study what
had  gone wrong in the markets there and to learn from their experience.
Fortunately,  he  said,  even though India has foreign investments worth
$9.1 billion.  FIIs  have  only  a  6-7  per cent holding in our market.
"We are vulnerable to the extent that the FII investment is in the index
shares,  but  the economy will not get affected as a result of this," he
said.  The  problem  faced  in  Indonesia  was that they let the foreign
holdings  go  up  50 per cent. Therefore, when the FIIs decided to sell,
the  collapse  was  inevitable,  he said. Thailand and Malaysia also had
been  living  beyond  their  means,  borrowing in dollars and using very
little  for  useful development, he added. Damani clarified that foreign
investors  were  welcome  if  they  felt comfortable in India, but India
should not go out of its way to accommodate them. They might clamour for
things  like  derivatives  saying  that it is necessary for hedging, but
where  in the world has it been possible to find out whether derivatives
are being used for hedging or for speculation, he asked.

Govt unwraps autonomy package for banks

The  Finance  Minister,  Mr.  P.Chidambaram, today announced an autonomy
package  for  public  sector banks, which would unshackle the banks on a
number of administrative fronts, including recruitment and postings. The
package has  laid  down  four criteria for the banks to enjoy the entire
set  of  autonomy features which have been outlined. These are a capital
adequacy ratio  of  eight per cent, an NPA (non-performing assets) level
below  nine per cent, net profit of three years and a minimum of Rs. 100
crores  in net-owned funds. Mr, Chidambaram told reporters after his day
-long meeting with the chief executives of public sector banks, that the
Board  of  Directors  of  those banks which meet the four criteria would
enjoy  the entire set of autonomy parameters outlined, while those which
do  not  would   be  granted  "lesser  autonomy".  "A set of 11 kinds of
autonomy"  had been specified in the package. Among these are freedom to
recruit   specialist   officers,   undertake   campus   recruitment   of
probationary  officers,  authority  to  create  posts below the level of
General  Managers  and  to  formulate  their own policies with regard to
rural  postings  of  officers  and  deputation's and lateral movement of
officers  to  other  banks.  According  to the Finance Minister, greater
administrative  autonomy  was  felt necessary to cope with the increased
operational freedom granted by the RBI in the wake of liberalisation and
de-regulation.  One  the issue of the need to improve the credit flow to
the  corporate  sector,  Mr.  Chidambaram  said  "there was an upturn in
credit  off-take  which  is  likely to be sustained during the next five
months  of  the  current  fiscal.  I have told the banks to give greater
attention  to priority sector lending with special attention to PMRY and

'Indian stock markets down 3.4% in Oct'

Indian  share  markets dropped by 3.4 per cent, a decline  substantially
lower  than  several  emerging  and  developed markets, according to the
Morgan  Stanley Capital International (MSCI) indices for October. Indian
stock  markets  performed  better  than 31 other emerging markets and 30
developed  markets  in  October.  Turkey  and Morocco were the only  two
markets  which  recorded  positive  gains  in October, Besides these two
emerging  markets,  only  Colombia, which fell by 1 per cent, was better
than   India.  Stock  markets  all  over  the  world  recorded  negative
performance in October. Among the emerging markets, the worst performers
were  Thailand,  which recorded a fall of 34.1 per cent, Korea (31.1 per
cent),  Brazil  (24.2 per cent) and Taiwan (15.5 per cent). Overall, the
MSCI  Emerging Market (EM) index for Asia recorded a decline of 18.9 per
cent.  The  MSCIEM index for the Far East declined by 22.5 per cent, and
for Latin America by 19.1 per cent. According to a Morgan Stanley  press
release,  the extreme volatility in the Asian currency market in October
continued  to take its toll on the region's stock markets. The MSCI Hong
Kong index declined by 29.1 per cent.