Metkore is also negotiating with a well-established local firm for a joint venture agreement for its new ferro chrome project in Oman
Dubai: India's Metkore Alloys and Industries is set to build a world class 165,000 tonnes per annum capacity ferro chrome smelter project in Oman with an envisaged investment of $80 million, reports PTI.
This is the third ferro chrome project coming up Sohar free zone, local media reports said. The project work of Metkore is expected to start in October, with the completion of the work within 18 months.
According to reports, a land lease agreement was signed by Sheikh Sa'ad bin Mohammed Al Mardhouf Al Sa'adi, Chairman of Port of Sohar, and Prashant Boorugu, Managing Director of Metkore Alloys & Industries.
Metkore is negotiating with a well-established local firm for a joint venture agreement for the ferro chrome project, but no agreement has been signed so far.
The ferro chrome plant will become operational in 2014 and is expected to generate direct employment for about 500 people.
The company has already appointed consultants to carry out technical and environmental studies for the project.
Omanisation is the prime objective of the company and all efforts will be taken to train the local Omani nationals and appoint them to operate the plant profitably, it has said.
Further, the low grade chrome ore available in Oman will be beneficiated and put to gainful use thereby adding value to the mineral resources available in Oman.
The Department of Financial Services has been overactive in issuing directives. Worse, DFS is resorting to brazen ways of dictating to PSBs to sponsor their proposals to the board and get them approved
Notwithstanding the fact of substantial private shareholding in PSBs and the managerial autonomy granted to them in 2005, the central government's power to give direction to banks in regard to matters of public interest, after consultation with the RBI derived from the Banking Companies (Acquisition and Transfer of undertaking) Act 1970-in short Bank Nationalisation Act, 1970-remains intact. The nature of consultation with the RBI is not clear nor is it clear whether the government could overrule RBI's advice in matters where the RBI is professionally competent. Be that as it may, in the recent past, the ministry of finance, Department of Financial Services (DFS) has issued a number of directions, advisories and directives to PSBs, some of which are in contravention of the 2005 Managerial Autonomy granted to PSBs, and they are also not in keeping with the aim of protecting minority shareholders' rights as mentioned in the 2005 document. There is thus the potential risk that private shareholders could call into question some of these directions/ advisories a la TCI against Coal India. Besides, almost invariably the DFS wants banks to place its letters before the board of directors within a fortnight, underlying presumption being that the proposals would be approved without demur by the board where majority of the directors are nominees of the government.
This is bad enough but more worrisome is that some of directives/advisories are thoughtless, if not downright quixotic, as would be illustrated with some glaring examples.
[A] Constitution of Credit Approval Committee (CAC)
The ministry of finance, Department of Financial Services (DFS) issued a Gazette Notification on 05 December 2011 under Section 9 of the Bank Nationalisation Act, 1970, in consultation with the RBI, to constitute in each of the nationalised bank a credit approval committee which is authorised to approve credit proposals of Rs400 crore in the case of Category A banks with business of Rs3 lakh crore or more and up to Rs250 crore in the case of other banks. The notification clearly stated that it is a committee of the board and that it shall have a chairman & managing director, executive directors who are whole-time directors as also designated chief general managers (CGMs)/general managers (GMs) as members. This notification came as a surprise to many banks as they had no prior indication nor did the government or the RBI consult them though it was not obligatory to do so.
The banks sought clarifications from DFS on two major issues: [i] as the CGMs /GMs are not directors on the board, they cannot be members of a board committee. More substantively, as they are the officials who recommend credit proposals, they cannot be on CAC as it would amount to proposers and approvers are the same at least in part. [ii] Whether the credit approval limit of Rs400/ 250 crore refers to single borrower or single proposal or for a group.
The DFS did not specifically clarify the position on the first issue and apparently left it to the banks to keep the CGMs/GMs as proposers and not members of CAC. On the second issue, DFS clarified-it is worth quoting, "These powers are applicable to any single proposal placed before the CAC, irrespective of group or individual exposure as such" (emphasis added). In a single swipe, DFS thus abolished the concept of exposure limit which is a prudential norm followed by banks world over with reference to credit risk they can undertake vis-a- vis their net worth, and blew away to the chagrin of RBI prudential norms prescribed by it. Neither DFS nor the RBI could be more emphatically aggressive in discarding a well established and prudent concept! Fortunately, banks kept their counsel and stuck to the credit approval limit, as per borrower. Incidentally the clarifications do not appear to have been gazetted though they are of substantial importance.
[B] Setting up of credit approval committees at the corporate, regional and zonal levels
The DFS sent out a draft proposal on the above subject on 17 February 2012 asking banks to comment on the proposal within a week. The proposal involved setting up of CACs at various administrative/controlling offices to deal with credit proposals expeditiously for which the CACs will be given specified powers by the boards of respective banks. In this, and the subsequent letter of 27 February 2012 apparently based on banks' comments, the powers presently exercised by officers in the hierarchy as per the scheme of delegation of powers in each bank was agreed to be retained, and the powers of the CACs at corporate and other controlling offices were to be prescribed for larger amounts. However, in reversal of the foregoing, the DFS advised the banks on 03 April 2012 as follows: "With the setting up of these committees, the powers vested in officers above the branch level should cease to exist" (emphasis added).
Under the existing scheme of delegation of powers, the discretionary powers of officials posted at the branches are determined by the category of branch as per business volume and the grade of officers. Thu, for example, a rural branch manger may be vested with powers of approval up to say, Rs2 lakh while a metro branch manager may have powers up to Rs100 lakh. Under the DFS dispensation, the CAC at say regional office could get a proposal for more than Rs2 lakh from a rural branch and for more than Rs100 lakh from a metro branch. This is totally incongruous with any rational scheme of delegation! The last word on the subject is not yet out.
[C] Amalgamation of geographically contiguous RRBs within a state
On 28 November 2011 the DFS sent out a letter to banks stating that the geographically contiguous RRBs sponsored by different banks within a state could be amalgamated with a single sponsor bank; in the annexure to the letter DFS even gave the list of RRBs and which sponsor bank could take over which RRBs. The DFS sought a "No objection certificate" from the sponsor banks on the proposed amalgamation by 30 November 2011 i.e. within two days very cavalierly.
The sponsor banks raised a few critical issues such as-technology platforms of merging banks are different and hence it will pose serious problems and would take time to harmonise, valuation of the merging banks would have to be a pre-requisite for determining fair exchange, the sponsor banks having private shareholdings which are listed on the Stock exchanges, the proposal would need the approval of shareholders etc. It is difficult to believe that the DFS had not known about valuation of the institutions as necessary for any merger or acquisition process. On the issue of technology compatibility, the general managers of banks were summoned and brow beaten to accept the proposal.
On other discomfiting concerns mentioned above, the DFS simply asked whether the sponsor banks have any objection to the proposed amalgamation based on geographical consideration. No bank dared to say NO. The DFS believed that issues raised could be kept aside and sorted out at a later date once the in-principle approval is received from all banks concerned. Putting the cart before the horse is what DFS believed as a defence of the half baked proposal mooted by it!
From the few of the examples narrated above, it should be clear that the Department of Financial Services has been overactive in issuing plethora of directives, advisories in the last one year or so without proper study of the issues. Worse still is the fact DFS is not reluctant to resort to brazen ways of dictating to the management of the PSBs to sponsor their proposals to the board and get them approved by the board of directors strictly within a short period of time and implement them within another short term deadline. It is an unfortunate truth that quite a few of the nominee directors are on the boards by virtue of political connections and hence are more than pliable to go along with the DFS. It is sad to note that the RBI which is purportedly consulted by DFS is either passive or prefer to remain mute. The erosion of managerial and functional autonomy of PSBs sends discouraging signals to the market which the banks have to approach for capital sooner than later. The RBI had estimated capital requirements of banking sector (both PSBs and private banks, though bulk will be for PSBs) as a whole at Rs5,68,744 crore over a five-year period (Source: RBI Report on currency and finance 2008) which by now with Basel III stipulation on capital adequacy would have gone up. In contrast, the government provided Rs16,500 crore and Rs15,888 crore in 2010-11 and 2012-13 Budgets.
That the government would not be able to meet this tall order of capital infusion is indicatively evidenced by the tortuous manner of infusing Tier II capital to State bank of India following its recent downgrade by the international rating agency. It may not long before the entire issue of the government holding a minimum of 51% of shares in PSBs would have to be revisited if Indian banks have to meet the credit needs of an expanding economy. Hence it is all the more important for DFS to be sensitive to market sentiments and the right of private shareholders. The argument of TCI in the recent dispute with the Coal of India might come to haunt the PSBs as well. To quote, "If they (government) choose to list a company they have to treat minority shareholders with respect. They were committed to running the business in a professional manner". One hopes the DFS would reconcile itself to the fact the government is not the sole proprietor of nationalised banks for it to use its sledge-hammer style of governance.
(A Banker is the pseudonym for a very senior banker who retired at the highest level in the profession.)
In a reply to RTI activist Subhash Agrawal, the DoE has admitted to ‘unauthorized’ activities at ‘6, Krishna Menon Marg’ bungalow which was allotted to the late Babu Jagjivan Ram
The Directorate of Estates (DoE) in a reply to a Right to Information (RTI) application has admitted existence of an ‘unauthorized’ statue and a photo-exhibition of late Babu Jagjivan Ram along with two boards including one by New Delhi Municipal Corporation depicting the 6 Krishna Menon Marg bungalow as Babu Jagjivan Ram Memorial.
The reply followed the Central Information Commission (CIC) order dated 7 May 2012 to the ministry of urban development (MoUD) to disclose information related to allotment, occupation and use of a government bungalow by family members of late Indrani Devi, widow of late Babu Jagjivan Ram and her daughter and Lok Sabha Speaker Meira Kumar, in public domain. DoE comes under the MoUD. (Disclose details of Babu Jagjivan Ram’s bungalow, orders CIC)
In the same reply to the RTI application filed by Delhi-based activist Subhash Agrawal, the DoE revealed that Central Public Works Department (CPWD) was the authority responsible to take care of the said bungalow.
According to Mr Agrawal, considering the above information, the DoE had deliberately avoided other queries such as the owner of the photos displayed at the exhibition at the bungalow; information on removing ‘unauthorized’ statue of late Babu Jagjivan Ram, photo-exhibition on him and a NMDC board stating it as ‘Babu Jagjivan Ram Memorial’ and information on the person who had given permission to Babu Jagjivan Ram National Foundation to hold Sarva Dharma Prarthana in 2011, among others.
“Director of Estate has surprisingly expressed ‘ignorance’ about persons living there despite their physical presence highlighted and observed by media-persons,” said Mr Agrawal referring to a media report. He added that, “Strict-most action should be taken against all CPWD persons responsible for not taking action against encroachers and trespassers of the bungalow now continuously for last one decade, when it was claimed to be vacated by Ms Meira Kumar vide her letter dated 28 November 2002 addressed to the CPWD. Immediate arrest of persons living and having encroached the said bungalow should be made. All unauthorized structures, boards, photo-exhibition, etc, should be immediately removed.”
Mr Agrawal demanded that, “High-level enquiry should be ordered and responsibility fixed for keeping the bungalow un-allotted for such a long period resulting in loss of crores of rupees in terms of rental value. The Comptroller & Auditor General of India (CAG) should take cognizance of such big loss to exchequer. Immediate steps should be taken to allot this bungalow to some entitled one.”
In 2004, Ms Kumar was allotted the bungalow number 6 at Krishna Menon Marg after she became the Union minister of social justice & employment. The same residence was the house of her father and senior Congress leader Babu Jagjivan Ram till his death in 1986. Ms Kumar was allotted another bungalow, number 20 on Akbar Road when she became the Speaker in 2009 and where she currently lives.
However, according to the news reports, Ms Meira continued to hold both these bungalows. A statement from the Speaker’s office had said that the family members of late Indrani Devi had vacated the Krishna Menon Marg bungalow by 30 November 2002, and this was intimated to the CPWD, NDMC, Director of Estates and other authorities. It is also reported that the bungalow has been turned into a memorial for Babu Jagjivan Ram.
Interestingly, considering the Union cabinet’s decision on 6 August 2000, which said that no bungalow in the future could be converted into a memorial, furnished under the earlier RTI application of Mr Agrawal, the memorial of Babu Jagjivan Ram is in complete violation of that decision.
In November 2011, the RTI query filed by Mr Agrawal had revealed that the Speaker has been served A Rs2 crore bill for THE illegally occupied bungalow. (Lok Sabha Speaker owes govt Rs2 crore as unpaid rent). However in reply to Mr Agrawal’s earlier RTI query the DoE said that the recovery notice was withdrawn.