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

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Guarding the Guards

THERE is a surreal ring to the official announcement last week that henceforth the financial institutions will monitor the use of capital raised from the market by companies. On the need for such monitoring there will hardly be any difference of opinion. In the last few months companies controlled by industrialists close to the then government of Rajiv Gandhi were allowed to raise very large sums from the capital market with little or no indication of what the money was to be used for It will also be generally agreed that ordinarily the financial in- solutions should have been regarded as being well placed to undertake the monitoring role; they are after all expected to regularly perform that task in respect of the loans they advance. What is very odd about the government's announcement is that it totally ignores the prime role that the financial, institutions themselves have played in the very corporate shenanigans to prevent which the government has felt the need to monitor the use of monies raised by companies from the capital market.

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