Sunday, June 28, 2009

SBI gives financial guarantee

Old news. Tatas got SBI to guarantee a debt paper. Once upon a time, financial guarantees were strictly prohibited by the RBI. Nothing has changed in law. But the regulator winks at this, since the top brass of SBI seem to have the clout to get away with this. It will be interesting to see if the guarantee is revoked or modified. If that were to happen, every investor would have to get a refund. If past is any example, the Tatas will write to every investor and say that if we do not hear from you, we presume consent. This is how corporate India functions and regulators snore.
Now, how can SBI refuse to guarantee other corporate paper? Surely, many must have already approached.
To my mind, this guarantee smells..............

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