Govt Mulls Check On Bear Cartel
Finance secretary Vijay Kelkar yesterday met select public sector bank chiefs to develop a strategy to counter the bear cartel backed by some foreign institutional investors accused of trying to destabilise stock markets by the government, sources said.
They pointed out that the ministry is watching the situation and is likely to spell out the strategy soon.
Government sources pointed out that the discussion is in response to the brief submitted by the Unit Trust of India (UTI) on the need for an effective counter to the FII bear operations.
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"The UTI top brass has informed the ministry that there is an urgent need to thwart the bear operations. UTI feels that such a step is essential as the cartel has the ability to run amok with the financial system," sources said.
The finance ministry is peeved that a bear cartel _ allegedly led by a FII group _ has been hammering stocks after news of erosion in net asset value (NAV, value of a portfolio divided by the outstanding units) of US 64, the UTI flagship fund, was made public.
The BSE Sensex, prior to the UTI fiasco ruled at about 3100 but dropped to around 2800 in its aftermath.
PSU banks have considerable exposure in UTI's US 64 scheme, but the bank chiefs yesterday maintained they will not pull out their investments.
State Bank of India has invested about Rs 400 crore in the scheme, while others have lesser share, like Bank of Baroda (Rs 100 crore) and Corporation Bank (Rs 50 crore).
Bankers who attended the meeting refused to comment on UTI and said the meeting was called to discuss the problem of sluggish credit flow during the first half of the current fiscal. Among those who attended the meeting were SBI chairman M S Verma, Punjab National Bank chairman and MD Rashid Jilani, Bank of Baroda chairman K Kannan, Union Bank chairman A T Pannir Selvam and Canara Bank chairman T R Sridharan and a general manager from the Bank of India, besides the UTI chairman P S Subramanyam. Sources, however, said a meeting with the bankers was planned ever since UTI warned of disastrous consequences of the FII handiwork.
Further, after finance minister Yaswant Sinha and finance secretary Vijay Kelkar returned from the IMF-World Bank meet on Monday, Subramanyam has stationed himself in Delhi for regular consultations with the ministry.