Indian Current Affairs: 11.09.2008

Stock that has been repurchased by the issuing company. These shares don't pay dividends, have no voting rights, and should not be included in shares outstanding calculations. A company can decide to hold onto treasury stocks indefinitely, reissue them to the public, or even cancel them.

Treasury stock is created when a company does a share buyback and purchases its shares on the open market. This can be advantageous to shareholders because it lowers the number of shares outstanding. However, not all buybacks are a good thing. For example, if a company merely buys stock to improve financial ratios such as EPS or P/E, then the buyback is detrimental to the shareholders, and it is done without the shareholders' best interests in mind.

Why did we start our day with such an obscure phrase as a treasury stock? Because it is news.

United Sprits Limited (USL) of Vijay Mallya is reportedly looking at unlocking value from 13.7 million treasury stock. The treasury stock accounts for 14-15% of the company’s share capital, and placing these with a strategic investor will not dilute the promoter stake, which currently stands at 37%.

FIVE financial institutions in India are coming together to form a new entity, which will lend to those untouched by high street banks. The move reflects a new approach to financial inclusion — tapping potential customers at the bottom of the pyramid — a market that is estimated to be worth billions of rupees.

The partners in the joint venture are Life Insurance Corporation of India, National Housing Bank, Standard Chartered Bank, IFC — a part of World Bank Group — and Union Bank of India.

The proposed entity, to be christened Financial Inclusion Corporation of India (FICI), will be a non-banking finance company (NBFC).

FICI will primarily finance microfi-nancial institutions (MFI). An equally important objective of the company, will be to influence policy-making and regulations with regard to functioning of MFIs. The other main idea is to position FICI as the coordinating agency for promoting financial inclusion.

Significantly, the proposed company will channelise donations and grants on behalf of local and overseas donors to MFIs. However, it is not yet clear at this stage whether FICI would channelise charities and grants to NGOs and other nonprofit organisations.

This is one excellent piece of an editorial on the subject worth our reading and keeps for record sake. Very important for political science students and those who like to follow international relations.

Take a look at this analysis about why the US is interested in ending New Delhi’s nuclear isolation.

The nuclear have-nots are denied diverse advanced technologies that enable economic and strategic advance. India stands hobbled, as China grows from strength to strength. The Bush administration, which tends to see the world in black and white, sees this as being bad for the world. India is too large and powerful a nation to be kept outside the group of nations that maintain the balance of power. So, liberating India from technology denial would develop it as a counterweight to China in the region, in fact, the only viable one. This is good for regional as well as global stability. Being a counterweight, of course, is quite different from being hostile.

As on August 31, 2008, NSDL had 9.38 lakh frozen demat accounts while CSDL had 2.88 lakh such accounts.

The government has sought legal opinion on whether it can declare the stocks in the frozen accounts as unclaimed property. At present, there is no provision in the law for forfeiture of unclaimed shares or extinguishing them under the companies law. In the case of dividends which lie unclaimed for more than seven years, the amount is transferred to Investor Education & Protection Fund. The unclaimed securities in the accounts could also meet the same fate.