Indian Current Affairs: 19.10.2010

Politics & the Nation

A two-judge bench of the high court failed to produce a verdict on the status of 11 disqualified MLAs. The issue will now be assessed by a third judge. The BJP gained numerical comfort after barring this group as well as 5 Independents.
The division bench comprising Chief Justice J S Khehar and Justice N Kumar were split in their verdict on the disqualification notice issued by Karnataka legislative assembly Speaker K G Bopaiah against the 11 BJP MLAs.
While Chief Justice J S Khehar upheld the disqualification of the 11 BJP MLAs by the Speaker, Justice N Kumar set aside this ruling. Though the judges were in agreement on three points they disagreed on the crucial Anti-defection Law.
The issue of disqualification of five independent MLAs too remain undecided with the two-member bench referring the matter to another division bench for hearing on November 2.

Finance & Economy

On the very first day of the issue it is reported that 34% of the shares offered are subscribed. Further, it is reported that the shares of CIL are going for a premium of 11% in the grey market.
Coal India, with an output of 431 million tonnes a year, would be the world’s biggest listed coal producer. Its coal reserves are also the largest in the world with 10.6 billion tonnes compared with Peabody’s 9.3 billion tonnes and China’s Shenhua’s 7.4 billion tonnes.

Micro-credit institutions would make small loans to groups of women at rates lower than what moneylenders charge. These would go into productive investments and defaults would be kept low because the entire community — or a group of women borrowers — would keep an eye on each other to make sure that the funds were used properly and repayments were on time.
Today, it’s reckoned that women’s selfhelp groups (SHGs) reach about 50 million people. Another 20 million are covered by microfinance institutions (MFIs). That leaves about 100 million people who still rely on moneylenders or relatives for loans.

Numbers from the Reserve Bank of India (RBI) show that over 53% of loans there are sourced from moneylenders. Tamil Nadu follows, with moneylenders accounting for 40% of all borrowings. Moneylenders account for more than 30% of all lending in four more states: Bihar, Manipur, Punjab and Rajasthan.

MFIs borrow from banks at around 12% and lend at anything between 25% and 30%. The return on assets — a ratio used to measure profitability of financial institutions — is 6.8 for SKS Microfinance; it’s 1.7 for HDFC Bank and 1.1 for SBI. Over the years, profits have grown at a fast clip: in the last two years, earnings per share at SKS shot up by 346% and 59% respectively; they are expected to rise to 79% by March 2011.

The proposal to create an over-arching regulator to oversee auditing norms in the country has been opposed by the Institute of Chartered Accountants of India (ICAI).
The parliamentary standing committee on finance has recommended enhancing the regulatory oversight of the National Advisory Committee on Accounting Standards (NACAS) to enable it to vet all audit norms, a suggestion that has found favour with the ministry of corporate affairs as well.
NACAS, which functions as an expert authority under the administrative commands of the ministry of corporate affairs, has representation from all regulators like Sebi, Comptroller and Auditor General of India, Central Board of Direct Taxes and Reserve Bank of India, apart from having representatives from industry. In its new form, the body will be called the National Advisory Committee on Accounting and Auditing Standards (NACAAS) and there will be a provision requiring ICAI to seek a go-ahead from the expert forum before prescribing any norm.
A committee within ICAI, the auditing and assurance standards board, currently prepares audit norms. The draft norms are vetted by its own council, which has representation from the ministry as well.

The government enunciated its first National Water Policy in 1987. A revised version was enunciated in 2002. Yet another revision is underway. This article has some interesting suggestions on the policy that is about to be formulated. Good one.

Here is a very good ET in the Classroom column that discusses the issue. Worth a read.

NSE has introduced this session as a measure to reduce volatility in stock prices during the initial trading hours and also for enabling better price discovery.
In the pre-market session, ‘buy’ and ‘sell’ orders accumulate in the trading system during the first seven minutes, 9:00-9:07 am. Then, the market will close anytime during the eighth minute of trade. In the next four minutes, trades will be matched and the confirmation is sent to brokers. In the next three minutes, between 9:12 am and 9.15 am, unexecuted orders will be moved to the regular market. In the pre-market session, the prices of 50 stocks can rise or fall a maximum of 20% from their last close.

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Indian Current Affairs