ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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Finance Companies Bear the Brunt

Finance Companies Bear the Brunt Jairaj Kapadia NOT until the reports of the investigation into batiks' securities scandal are out will speculation about it die down. Estimates of the amount involved have varied vastly from the figure of Rs 622 crore of State Bank of India to start with to Rs 2,000 crore in no time and now to as much as Rs 5,000 crore. Speculation has thrived with tfic Reserve Bank of India ordering Bank of Karad into liquidation and put- ring Metropolitan Co-operative Bank in Bombay on hold due to these two banks' apparently irretrievable involvement in the business. The mist may clear to some extent with the RBI making public the report of its investigation which as the Hie Week's Companies finance minister said during his recent visit to Bombay the RBI would be doing very shortly, Meanwhile, the stock market, which took a body blow as the CBI was asked by the government to investigate Harshad Mehta's involvement, has started showing signs of levelling after a sharp decline in share prices. The sensitive share price index of the Bombay stock exchange, which in two days, April 28 and 29. had caved in from 4,467.32 to 3,674.41 and was down still further at 2,963.49 on May 28, was seen to be levelling at around 3,000. And while scrips of all description suffered as prices declined all round, in relative terms (Rs lakh) finance company shares fared far worse. These shares had been running ahead of the others in the bull, market after the budget following the concessions announced for equity investments and the permission to the private sector to establish mutual funds. But as the banks' securities scandal affected the financial sector, finance company shares have moved more rapidly in the reverse gear.

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