Yesterday, we touched upon one aspect of the life of HT Parekh, truly the architect of home finance in India. Today, on his birth centenary, we explore his fearless integrity and his role in ensuring how household savings of ordinary Indians could be gainfully employed in industrialisation, and how they could benefit from the gains of entrepreneurship
On 9th March, (Remembering HT Parekh: The man who brought home loans to India ), Moneylife had touched upon how HT Parekh (HTP) had proved that successful mortgage finance was possible in an unregulated industry.
Not many know that HTP established his reputation for fearless integrity (at a time when as an executive of nascent ICICI he had to look to the government for a myriad permissions and approvals) due to his testimony to the MC Chagla Commission of Inquiry on the LIC-Haridas Mundhra scam brought to light by Feroze Gandhi, son-in-law of the then prime minister. He said: "So far as the decision was taken primarily by New Delhi with a situation which Mundhra precipitated, the deal as such, had a certain validity, though it does not follow from this that the funds of LIC can be utilised freely without fuller consultation.
"LIC as a public undertaking with funds available for investment can, no doubt, play an important part but this should be consistent with the primary aim of safeguarding policy-holders' interests." Further "The propriety of the purchases depends on the view that might be taken on the situation then prevailing. It could have been on grounds of public purpose, viz., to avert a financial crisis. LIC, as such, could not invest on those grounds. That would be the field of government policy. In that event the decision would be that of the government. This would also involve consideration of how far the government should regard it as proper that the funds of LIC are utilized for such a purpose."
"As the largest investor and as a nationalized undertaking, the investing public, particularly the small investor, would expect LIC to be a watchdog of the investor class as such. LIC must be ready and willing to assume this special responsibility which it can do in close consultation with the government, when so required. (Emphasis added; pages 556, 558, 565; Volume 2 of India in Transition through the Eyes of a Visionary: 1940s to 1990s—Writings of HT Parekh, copy available for reference at the Moneylife Knowledge Centre).
That was in 1957—when Jawaharlal Nehru was the prime minister and TT Krishnamachari the finance minister (FM). HM Patel was the finance secretary. TTK resigned and HM Patel was transferred. Years later, HM Patel became the FM during the Janata government and came to inaugurate HDFC on Dassera day, October 22, 1977.
Championing the Cause of Small Investors
The health of the capital market was a subject uppermost on his mind. He wrote and spoke about it—from the beginning of his professional life in India after he returned from the London School of Economics in 1936 to work briefly as secretary of the Bombay Shareholders' Association, at Harkissondas Lakhimdass, at ICICI and even at HDFC. He constantly advised captains of Indian industry not to treat the market as a source of cheap funds. He viewed it more as a way of economic democracy-so that the ordinary Indians' savings could be gainfully employed in industrialisation and they could benefit from the gains of entrepreneurship.
It was his constant lobbying for the investment vehicle of mutual funds that led to the setting up of Unit Trust of India in 1964 by TTK who was the FM once again. In a note that he wrote to the government in August 1960 proposing that a mutual fund be set up, he said: "Another source of support to the investment market comes from investment trusts but this agency has not yet made good progress in India. In advanced countries, in recent years, unit trusts or mutual funds, as they are called in the USA, have been highly developed. It is to be hoped that the government will give suitable encouragement for the growth of this agency in order that it can play an effective role in the strengthening of the capital market in the country." (p260, Volume 1).
He was too modest and self-effacing a person to believe that his life's work would be of any value to present and future generations. Yet, with constant entreaties of friends, and to overcome his loneliness after his wife Hira passed away in November 1970, he penned his memoirs in Gujarati in the form of letters to her Hira ne Patro and a sequel Hira ne Vadhu Patro (Letters to Hira and More Letters to Hira). These books along with many of his speeches and articles provide a veritable goldmine for those interested in the economic history of India.
While compiling and editing some 300 pieces of HTP's writings in English, spread over more than 50 years, I learnt as much about the man as I had while working with him. His writings bear witness to the remarkable range of his intellectual and practical interests—capital market, credit policy, gold policy, development banking, economic and industrial policy, rural development, social infrastructure, planning and regional cooperation. At the core of it all was his concept of development—shaped in no small measure by the Fabian socialism of the London School of Economics of the early 1930s and by a host of his contemporaries and his peer group in the world of economics and finance.
The decline in food inflation is expected to give a breather to the government, which has been under increasing pressure to rein in the inflationary pressure caused by high food and crude oil prices
New Delhi: After a gap of nearly three months, food inflation fell to a single digit at 9.52% for the week ended 26th February, from 10.39% in the previous week. The decline has been attributed to a fall in prices of potatoes, pulses and wheat, reports PTI.
The rate of price rise of food items has fallen to a single-digit figure for the first time since the week ended 4th December 2010, when it was 9.46%.
The latest figures are expected to give a breather to the government, which has been under increasing pressure to rein in the inflationary pressure caused by high food and crude oil prices.
For the week under review, prices of wheat declined by 1.07% on an annual basis, while pulses rates fell by 3.91%. Prices of potatoes also fell by nearly 9% year-on-year.
However, vegetables continued to be expensive and their prices went up by 9.23% on annual basis. In particular, onion prices were up by 3.90% year-on-year.
Rice also became dearer by 1.16% year-on-year and eggs, meat and fish became 15.38% costlier.
Meanwhile, prices of fruits rose by 18.75% and milk by 8.42% on an annual basis.
The non-food articles category saw a price rise of 29.85% during the week on an annual basis.
Fuel and power also became 9.48% more expensive, while petrol became costlier by 23.14%.
High food prices have been one of the major factors behind high overall inflation. Headline inflation in the country stood at 8.23% in January and the government has exuded confidence that it will fall to 7% by March-end.
According to a SEBI circular announced on Wednesday, mutual fund (MF) houses can utilise only one-third of the amount collected prior to the entry load ban in a financial year. The move will bring about uniformity in usage of load balances
Mumbai: Market regulator Securities and Exchange Board of India (SEBI) on Wednesday said mutual fund (MF) houses can utilise only one-third of the amount collected prior to the entry load ban in a financial year, which will bring in uniformity in usage of load account balances, reports PTI.
SEBI had banned MF houses from charging an entry load on their schemes since 1 August 2009. Before this, distributors were getting 2.5% commission from the MF houses when investors purchased such schemes, called entry-load.
"It is essential to bring about uniformity in usage of load balances," SEBI said in a circular.
The load account balances of MFs would now reflect the balance as on 31 July 2009, while the other would reflect accretions since 1 August 2009.
Experts said the SEBI circular would give clarity to the fund houses regarding usage of load account balances of schemes that were launched before the entry load ban.
According to the circular, fund houses cannot utilise more than one-third of the balances in the load account as on 31st July 2009, in one financial year.
"...The unutilised balances can be carried forward, yet in no financial year the total spending can be more than one-third of the load balances on 31 July 2009," SEBI said.
However, MFs would have freedom to use the accretions in the load account, post the entry load ban since 1 August 2009.
Commenting on the circular, SMC Global's head (research) Jagannadham Thunuguntla said, "Clarity on usage of load account balance will come. That may help MFs operationally."
Fund houses can use the balances in such accounts for meeting marketing and selling expenses, including agent's and distributor's commissions.
Currently, mutual funds charge a commission (exit load) from investors at the time of redemption before a stipulated time.